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Lawyers, other representatives, expert(s), tribunal’s secretary

Report of the Panel

I. INTRODUCTION

1.1.
On 7 July 1999, the European Communities and their member States (hereafter referred to as the "European Communities") requested consultations with the United States under Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (the "DSU") and, to the extent it incorporates by reference Article XXIII of the General Agreement on Tariffs and Trade 1994, Article 64.1 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (the "TRIPS Agreement") regarding Section 211 of the Omnibus Appropriations Act of 1998 (the "OAA").1,2
1.2.
The European Communities and the United States held consultations on 13 September and 13 December 1999, but failed to reach a mutually satisfactory solution. On 30 June 2000, the European Communities requested the establishment of a panel under Article 6 of the DSU and Article 64.1 of the TRIPS Agreement.3
1.3.
At its meeting on 26 September 2000, the Dispute Settlement Body (the "DSB") established a panel in accordance with Article 6 of the DSU with the following standard terms of reference:

"To examine, in the light of the relevant provisions of the covered agreements cited by the European Communities and their member States in document WT/DS176/2, the matter referred to the DSB by the European Communities and their member States in that document and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements."4

1.4.
Canada, Japan and Nicaragua reserved their rights to participate in the panel proceedings as third parties.
1.5.
On 17 October 2000, the European Communities made a request, with reference to paragraph 7 of Article 8 of the DSU, to the Director-General to determine the composition of the Panel. This paragraph states:

If there is no agreement on the panelists within 20 days after the date of the establishment of a panel, at the request of either party, the Director-General, in consultation with the Chairman of the DSB and the Chairman of the relevant Council or Committee, shall determine the composition of the panel by appointing the panelists whom the Director-General considers most appropriate in accordance with any relevant special or additional rules or procedures of the covered agreement or covered agreements which are at issue in the dispute, after consulting with the parties to the dispute. The Chairman of the DSB shall inform the Members of the composition of the panel thus formed no later than 10 days after the date the Chairman receives such a request.

1.6.
On 26 October 2000, the Director-General composed the Panel as follows:

Chairperson: Mr. Wade Armstrong

Members: Mr. François Dessemontet

Mr. Armand de Mestral

1.7.
The Panel met with the parties on 24-25 January and 7 March 2001. It met with the third parties on 25 January 2001.
1.8.
On 1 February 2001, the Panel sent a letter to the International Bureau of the World Intellectual Property Organization ("WIPO"), which is responsible for the administration of the Paris Convention for the Protection of Industrial Property. In that letter, the Panel requested factual information, consistent with Article 13 of the DSU, on the provisions of the Stockholm Act of 1967 of that Convention (the "Paris Convention (1967)"), incorporated into the TRIPS Agreement by its Article 2.1, that are relevant to the matter. It also expressed its interest in obtaining factual information on the way the determination of the owner of a trademark may have been addressed in the negotiating history of the Convention or in subsequent developments. The International Bureau of WIPO provided such information in a letter dated 2 March 2001.
1.9.
The Panel submitted its interim report to the parties on 11 June 2001. The Panel submitted its final report to the parties on 3 July 2001.

II. FACTUAL ASPECTS

2.1.
The dispute concerns Section 211 of the OAA, signed into law on 21 October 1998. Section 211 deals with trademarks, trade names, and commercial names that are the same as or substantially similar to trademarks, trade names, or commercial names that were used in connection with businesses or assets that were confiscated by the Cuban Government on or after 1 January 1959. Section 211 reads as follows:

SEC. 211. (a)(1) Notwithstanding any other provision of law, no transaction or payment shall be authorized or approved pursuant to section 515,527 of title 31, Code of Federal Regulations, as in effect on September 9, 1998, with respect to a mark, trade name, or commercial name that is the same as or substantially similar to a mark, trade name, or commercial name that was used in connection with a business or assets that were confiscated unless the original owner of the mark, trade name, or commercial name, or the bona fide successor-in-interest has expressly consented.

(2) No U.S. court shall recognize, enforce or otherwise validate any assertion of rights by a designated national based on common law rights or registration obtained under such section 515,527 of such a confiscated mark, trade name, or commercial name.

(b) No U.S. court shall recognize, enforce or otherwise validate any assertion of treaty rights by a designated national or its successor-in-interest under sections 44 (b) or (e) of the Trademark Act of 1946 (15 U.S.C. 1126 (b) or (e)) for a mark, trade name, or commercial name that is the same as or substantially similar to a mark, trade name, or commercial name that was used in connection with a business or assets that were confiscated unless the original owner of such mark, trade name, or commercial name, or the bona fide successor-in-interest has expressly consented.

(c) The Secretary of the Treasury shall promulgate such rules and regulations as are necessary to carry out the provisions of this section.

(d) In this section:

(1) The term "designated national" has the meaning given such term in section 515,305 of title 31, Code of Federal Regulations, as in effect on September 9, 1998, and includes a national of any foreign country who is a successor-in-interest to a designated national.

(2) The term "confiscated" has the meaning given such term in section 515,336 of title 31, Code of Federal Regulations, as in effect on September 9, 1998.

2.2.
Part 515 of title 31 of the Code of Federal Regulations (the "CFR") contains the Cuban Assets Control Regulations (the "CACR"). Section 515,305 of that Part (hereafter cited as 31 CFR 515,305) contains the definition of the term "designated national" referred to in Section 211(d)(1). It reads:

Section 515.305 Designated national.

For the purposes of this part, the term designated national shall mean Cuba and any national thereof including any person who is a specially designated national.5

2.3.
Section 515,336 of title 31 of the CFR contains the definition of the term "confiscated" referred to in Section 211(d)(2). It reads:

Section 515.336 Confiscated.

As used in Section 515,208, the term confiscated refers to:

(a) The nationalization, expropriation, or other seizure by the Cuban Government of ownership or control of property, on or after January 1, 1959:

(1) Without the property having been returned or adequate and effective compensation provided; or

(2) Without the claim to the property having been settled pursuant to an international claims settlement agreement or other mutually accepted settlement procedure; and

(b) The repudiation by the Cuban Government of, the default by the Cuban Government on, or the failure of the Cuban Government to pay, on or after January 1, 1959:

(1) A debt of any enterprise which has been nationalized, expropriated, or otherwise taken by the Cuban Government;

(2) A debt which is a charge on property nationalized, expropriated, or otherwise taken by the Cuban Government; or

(3) A debt which was incurred by the Cuban Government in satisfaction or settlement of a confiscated property claim.

2.4.
Section 211(a) refers to Section 515,527 of 31 CFR, which read at the time, 21 October 1998, when Section 211 was signed into law:

Section 515.527 Certain transactions with respect to United States intellectual property.

(a) Transactions related to the registration and renewal in the United States Patent and Trademark Office or the United States Copyright Office of patents, trademarks, and copyrights in which the Government of Cuba or a Cuban national has an interest are authorized.

(b) This section authorizes the payment from blocked accounts or otherwise of fees currently due to the United States Government in connection with any transaction authorized in paragraph (a) of this section.

(c) This section further authorizes the payment from blocked accounts or otherwise of the reasonable and customary fees and charges currently due to attorneys or representatives within the United States in connection with the transactions authorized in paragraph (a) of this section.

2.5.
After the entry into force of Section 211, the CACR were amended by adding a new subparagraph (a)(2) to Section 515,527 of 31 CFR. After this, its paragraph (a) became subparagraph (a)(1). The amendment entered into force on 10 May 1999. The new subparagraph (a)(2) reads:

(a)(2) No transaction or payment is authorized or approved pursuant to paragraph (a)(1) of this section with respect to a mark, trade name, or commercial name that is the same as or substantially similar to a mark, trade name, or commercial name that was used in connection with a business or assets that were confiscated, as that term is defined in section 515,336, unless the original owner of the mark, trade name, or commercial name, or the bona fide successor-in-interest has expressly consented.

2.6.
Section 211(b) refers to Sections 44(b) and (e) of the Trademark Act of 1946, also referred to as the Lanham Act (15 U.S.C. § 1126 (b) and (e)), which read:

Section 44 (15 U.S.C. §1126). International conventions; register of marks

(…)

(b) Any person whose country of origin is a party to any convention or treaty relating to trademarks, trade or commercial names, or the repression of unfair competition, to which the United States is also a party, or extends reciprocal rights to nationals of the United States by law, shall be entitled to the benefits of this section under the conditions expressed herein to the extent necessary to give effect to any provision of such convention, treaty or reciprocal law, in addition to the rights to which any owner of a mark is otherwise entitled by this Act.

(…)

(e) A mark duly registered in the country of origin of the foreign applicant may be registered on the principal register if eligible, otherwise on the supplemental register herein provided. Such applicant shall submit, within such time period as may be prescribed by the Director, a certification or a certified copy of the registration in the country of origin of the applicant. The application must state the applicant's bona fide intention to use the mark in commerce, but use in commerce shall not be required prior to registration.

(…)

2.7.
Section 211(a)(1) relates to licensing regulations contained in the CACR. Under US law, all transactions involving property under US jurisdiction in which a Cuban national has an interest require a licence from the Office of Foreign Assets Control of the US Treasury Department ("OFAC").6 OFAC's regulations recognize two categories of licences for this purpose: specific licences and general licences. A general licence is an authorization for certain types of transactions that is set forth specifically in OFAC's regulations.7 In effect, these are standing authorizations for the types of transactions specified in the regulations, and a person wishing to engage in such transactions does not have to apply to OFAC. A specific licence, by contrast, is one whose precise terms are not set forth in OFAC's regulations.8 Generally, a person wanting to engage in a transaction for which a general licence is not available applies to OFAC for a specific licence.
2.8.
One of the general licences available under OFAC regulations is contained in 31 CFR 515,527 cited above. It is for transactions related to the registration and renewal in the United States Patent and Trademark Office (the "USPTO") and United States Copyright Office of patents, trademark registrations, and copyright registrations in which the Government of Cuba or a Cuban national has an interest. Section 211(a)(1) changed this OFAC general licence provision by stating that the coverage of this general licence would not include transactions or payments with respect to certain marks, trade names and commercial names – i.e., those that are the same as or similar to marks, trade names or commercial names used in connection with a business or assets confiscated by the Government of Cuba (unless the original owner or his successor-in-interest consents).
2.9.
The practical effect of Section 211(a)(1) is that a general licence is not available. Section 211(a)(1) does not address OFAC specific licences, which is another means by which payments of application fees may be authorized. A decision by OFAC not to approve any transaction or payment related to the registration or renewal of a trademark would, if not set aside on judicial review, prevent such registration or renewal because the statutory fees for the filings would not be deemed to have accompanied the filing.9
2.10.
Section 211(a)(2) directs that "[n]o U.S. court shall recognize, enforce or otherwise validate any assertion of rights by a designated national based on common law rights or registration obtained under such section 515,527 of such a confiscated mark, trade name, or commercial name". As regards registered trademarks, if a "designated national" (1) has obtained such a trademark registration under a general OFAC licence, and (2) the trademark is identical or similar to a trademark used in connection with a business confiscated without compensation by the Cuban Government, US courts will not recognize, enforce or otherwise validate any assertion of trademark rights by that person. The same is true of common law rights, including trademarks, trade names and commercial names, except that there is no federal requirement for registration.
2.11.
A "designated national", in the first instance, is "Cuba and any national thereof". This is under the first part of the definition in Section 211(d)(1), which incorporates the definition of "designated national" in 31 CFR 515,305. Section 211(d)(1) provides that "designated national" includes a national of any foreign country who is a successor-in-interest to a designated national. Any transaction by which a US person could become a successor-in-interest to a Cuban confiscating entity is prohibited under 31 CFR 515,201. US nationals would need to obtain a specific licence from OFAC for that purpose. OFAC has never issued a specific licence for such a purpose.
2.12.
Section 211(a)(2) provides that no US court shall recognize, enforce or otherwise validate any assertion of treaty rights by a designated national or its successor-in-interest under Sections 44 (b) or (e) of the Trademark Act of 1946 (15 U.S.C. 1126 (b) or (e)) for such a confiscated trademark, trade name, or commercial name.

III. FINDINGS AND RECOMMENDATIONS REQUESTED BY THE PARTIES

3.1.
The European Communities alleges that:

(a) Section 211(a)(1) of the OAA is inconsistent with Article 2.1 of the TRIPS Agreement in conjunction with Article 6quinquies A(1) of the Paris Convention (1967) and Article 15.1 of the TRIPS Agreement;

(b) Section 211(a)(2) of the OAA is inconsistent with Article 2.1 of the TRIPS Agreement in conjunction with Articles 2(1), 6bis (1) and 8 of the Paris Convention (1967), and Articles 3.1, 4, 16.1 and 42 of the TRIPS Agreement; and

(c) Section 211(b) of the OAA is inconsistent with Article 2.1 of the TRIPS Agreement in conjunction with Articles 2(1), 6bis (1) and 8 of the Paris Convention (1967), and Articles 3.1, 4, 16.1 and 42 of the TRIPS Agreement.

3.2.
In the view of the European Communities, these measures cause prejudice to the legitimate rights of trademark owners and owners of trade/commercial names, thus nullifying and impairing the rights of the European Communities.
3.3.
The European Communities requests the Panel to find that the United States has violated its obligations under Articles 3.1, 4, 15.1, 16.1 and 42 of the TRIPS Agreement as well as Article 2.1 of the TRIPS Agreement in conjunction with Articles 2(1), 6bis (1), 6quinquies A(1) and 8 of the Paris Convention (1967) and recommend that the United States bring its domestic legislation into conformity with its obligations under the TRIPS Agreement.
3.4.
The United States requests the Panel to find that Section 211 of the OAA is not inconsistent with Articles 3.1, 4, 15.1, 16.1 or 42 of the TRIPS Agreement, or with Article 2.1 of the TRIPS Agreement in conjunction with Articles 2(1), 6bis (1), 6quinquies A(1) and 8 of the Paris Convention (1967) and reject the claims of the European Communities in their entirety.

IV. ARGUMENTS OF THE PARTIES

A. INTRODUCTION

4.1.
This part of the report contains a summary of the claims and arguments contained in the parties' written submissions to the Panel and the written versions of the oral presentations they made at the Panel's meetings with the parties. Section B of this part summarizes the introductions to the parties' first written submissions. Section C summarizes the parties' claims and arguments that are specific to the inconsistencies between Section 211 and the TRIPS Agreement alleged by the European Communities. The claims and arguments are set out sequentially, starting with the arguments contained in the parties' first written submissions and followed by a summary of the arguments contained in subsequent submissions and statements. In its defence, the United States raised two horizontal issues that are relevant to all alleged inconsistencies between Section 211 and the TRIPS Agreement, namely the principle of non-recognition of foreign confiscations and the determination of the owner of a trademark. Section D summarizes the parties' arguments on these thematic issues. It also contains the arguments concerning burden of proof contained in the first US written submission. The parties' responses to the questions posed by the Panel are referenced where they add relevant information to the arguments contained in the parties' submissions. In general, the language used in the parties' submissions has been maintained close to its original form, subject to abridging and consolidating. Unless indicated otherwise, emphasis is used as in the parties' submissions.
4.2.
Part V contains a summary of the arguments made by the third parties and part VI a summary of the letter from the Chair of the Panel to the Director General of WIPO and his response thereto.
4.3.
The Panel's findings can be found in part VIII and its conclusions and recommendations in part IX of this report.

B. INTRODUCTIONS BY THE PARTIES

4.4.
In the introduction to its first written submission, the European Communities summarizes the reasons why it considers that certain aspects of the US legislation relating to the protection of trademarks and trade/commercial names are incompatible with the United States' obligations stemming from the TRIPS Agreement. The European Communities alleges that the objective of Section 211 of the OAA consists in curtailing the enjoyment and existence of certain trademarks and trade names in the hands of certain categories of right holders.
4.5.
The European Communities submits that US trademarks (including trade names and commercial names) can be owned and enjoyed by Cuban legal or natural persons. Until the enactment of Section 211, this included the possibility to pay registration and prolongation fees to the US Patent and Trademark Office (the "USPTO"). This also meant that such trademarks could be licensed or assigned and the right holder could request the US judicial system to take the measures available under US law to enforce his trademarks rights vis-à-vis infringers. Until the enactment of Section 211 it was irrelevant if such a US trademark had any relation to or resemblance with a trademark used or held by a Cuban entity which was confiscated during the Cuban revolution. Through the introduction of Section 211 the enjoyment of such rights in which the Government of Cuba, a Cuban national or any foreign successor-in-title to the latter have an interest, have been fundamentally curtailed.
4.6.
The European Communities argues that Section 211(a)(1) disallows any transaction related to the registration and renewal in the USPTO of trademarks in which Cuba or a Cuban national has an interest. Such transactions are only permissible if the historic owner of a confiscated Cuban entity, which held the same or a similar mark, expressly consents to them. The practical result of this provision is to take away – over time – existing US trademarks from their lawful owners, because they will no longer be able to renew the trademark registration. Furthermore, this provision prevents somebody from registering such a trademark if it has previously not yet been registered in the USPTO.
4.7.
The European Communities claims that Section 211(a)(2) prohibits US courts from enforcing any such US trademark in the United States on the request of a Cuban national or any foreign successor-in-interest. In other words, it makes the trademark devoid of any practical value because the exclusive rights flowing from a trademark cannot be enforced by the owner in any other meaningful way than by having recourse to courts.
4.8.
The European Communities submits that Section 211(b) prohibits US courts from enforcing any treaty rights concerning a trademark under the same conditions as pointed out in Section 211(a)(2), except that the prohibition applies here to all successors-in-interest.
4.9.
The European Communities adds that all three operative elements contained in Section 211, while not immediately doing away with the US trademark or trade/commercial name concerned, make it devoid of any practical effect and terminate its existence over time, where renewal is necessary.
4.10.
The European Communities argues that a US trademark or trade name that is subject to Section 211 is legally distinct from the property affected by the actions of the Cuban authorities in 1960. US assets, which include US trademarks or trade names, were completely unaffected by the Cuban confiscation measures, because the United States did not recognize – and subsequently has never recognised – any effects on the ownership of assets located in the United States as a consequence of the Cuban actions. In other words, tangible (e.g., real property, vehicles, machines) or intangible (e.g., receivables, bank deposits and intellectual property rights) assets located in the United States continue to belong to their original owners, despite the confiscation operated by the Cuban authorities in Cuba. The curtailment intended by Section 211 is targeted at situations where the original US trademark or trade name had ceased to exist, e.g., for lack of renewal by its owner, or where such a right has never existed in the US.
4.11.
In the view of the European Communities, these measures are in violation of the United States' obligations under the TRIPS Agreement as specified in paragraph 3.1 of Part III of this report.
4.12.
The European Communities also brings to the attention of the Panel a statement made by US government officials concluding that a draft that was the basis of the provision that later became Section 211 would have violated US TRIPS obligations.11
4.13.
The European Communities concludes its summary by stating that its economic interests in this matter are significant. Section 211 has already directly affected at least one well-known, commercially valuable trademark (Havana Club for spirit drinks). The rights to this mark and trade name are owned by a Cuban entity and have been licensed to a joint venture between that entity and an EC company. Given the great number of trademarks and trade/commercial names used in connection with Cuban enterprises before 1960, however, the effects of Section 211 are likely to prejudice a great number of commercial relationships by EC enterprises not only with Cuban entities but other partners that fall within the scope of Section 211.12
4.14.
In an introduction to its first written submission, the United States contends that the core issue presented by the dispute is whether the TRIPS Agreement requires the United States to recognize and enforce trademarks used in connection with assets that have been confiscated – i.e., expropriated without compensation13 – from their rightful owners. The United States submits that it does not. Under US law – both Section 211 and long-standing case law ‑ those whose claim to a trademark is based on an uncompensated confiscation of assets cannot claim rights of ownership in the United States, absent consent of the owners whose assets were confiscated. Indeed, in the United States' view, this is a principle that has been widely recognized throughout the world, and, in particular, by many WTO Members. According to the United States, the European Communities' view in this dispute, by contrast, is that a person's assets may be confiscated by a governmental authority which can then, invoking TRIPS and the Paris Convention, enforce those "rights" in the United States in a manner contrary to US law. TRIPS does not require such a result, and the negotiators of TRIPS could not have intended such a result.
4.15.
The United States argues that, contrary to the assertions of the European Communities in its introduction, Section 211 is not targeted at situations where the US trademark has ceased to exist or never existed, and is not distinct from the well-recognized right of sovereign nations not to recognize foreign confiscations. Section 211 is targeted at the assertion of rights by a confiscating entity or its US or non-US successors vis-à-vis the rights of the original owners of the confiscated assets, the precise target of the principle against giving extraterritorial effect to uncompensated confiscations. According to the United States, the European Communities is arguing that TRIPS and the Paris Convention require Members to recognize and enforce trademark rights asserted by foreign confiscating entities, even if that right is based on a foreign confiscation. The United States contends that the European Communities is, indeed, challenging the sovereign right of a Member not to give effect to foreign uncompensated confiscations, a right reflected in numerous judicial decisions both in Europe and in the United States.
4.16.
The United States submits consequently that the European Communities inaccurately "sets the stage" throughout its introduction by implying that, before Section 211 was enacted, confiscating entities could assert rights to US trademarks based on their uncompensated confiscation, and that Section 211 takes away these legitimate rights. It has never been the case, in the United States or elsewhere, that confiscating entities or their successors could establish ownership rights in assets not within their jurisdiction. Section 211 is a statutory reflection of the principle that they cannot do so.
4.17.
The United States argues that the European Communities has a heavy burden in this dispute ‑ to demonstrate that the well-established principle against giving extraterritorial effect to foreign confiscations has always been contrary to the Paris Convention, and is now contrary to TRIPS. The United States submits that the European Communities cannot meet this burden, and that its assertions of conflict between Section 211 and TRIPS are unfounded.

C. ARGUMENTS CONCERNING THE ALLEGED INCONSISTENCIES WITH THE TRIPS AGREEMENT

1. Section 211(a)(1) of the OAA

4.18.
The European Communities alleges that, "in practical terms", Section 211(a)(1) prevents the registration or renewal of already registered trademarks as targeted by its provisions. Specifically, Section 211(a)(1) operates to prevent an act (i.e., payment of the required fees) that must be performed by the right holder in order to register a mark or to ensure the renewal of trademarks that were duly registered in the United States.
4.19.
The United States contends that nothing in Article 15.1 of the TRIPS Agreement or Article 6quinquies of the Paris Convention (1967) as incorporated into the TRIPS Agreement requires the United States to accept the registration or renewal of trademarks, if the person registering or renewing the trademark registration is not the true owner of the trademark under US law. Indeed, neither the TRIPS Agreement nor the Paris Convention dictates who Members must recognize as the owner of a trademark. That decision is left to the domestic law of the Members. The United States also submits that the European Communities' claim of TRIPS inconsistency is based on two errors. First, the European Communities misunderstands the scope and effects of Article 15.1 of the TRIPS Agreement and Article 6quinquies (A)(1) of the Paris Convention (1967) as incorporated into the TRIPS Agreement, the two substantive provisions cited by the European Communities as the sources of the alleged obligations of the United States. Second, in formulating its argument, the European Communities ignores both Article 15.2 of the TRIPS Agreement, which limits the scope of Article 15.1, and Article 6quinquies (B) of the Paris Convention, which expressly provides for exceptions to the obligations established by Article 6quinquies (A)(1).

(a) Section 211(a)(1) of the OAA in relation to Article 15.1 of the TRIPS Agreement

4.20.
The European Communities claims that Article 15.1 of the TRIPS Agreement constitutes one of the fundamental trademark provisions of the Agreement by creating an obligation on WTO Members to make "any sign, or any combination of signs" which meet the criteria defined in the final sentence of this provision "eligible for registration as trademarks".
4.21.
The European Communities submits that the trademarks targeted by Section 211(a)(1), i.e., those which are "[...] the same as or substantially similar to a mark, trade name, or commercial name that was used in connection with a business or assets that were confiscated [...]" fully meet the criteria set out in Article 15.1 of the TRIPS Agreement to make a "sign, or combination of signs" eligible for trademark protection. This is further evidenced by the fact that Section 211(a)(1) also disallows the renewal of trademarks which have been duly registered by the USPTO, thus necessarily meeting all requirements which make a sign or a combination of signs a trademark.14
4.22.
The European Communities further argues that there is no provision in the TRIPS Agreement or the Paris Convention (1967) which would allow a WTO Member to make the registration or renewal of a trademark dependent on the express consent of the former owner of such a mark or similar marks anywhere in the world.
4.23.
Therefore, the European Communities claims that Section 211(a)(1) is at variance with the United States' obligations under Article 15.1 of the TRIPS Agreement.
4.24.
Before considering the specific provisions of Article 15.1 of the TRIPS Agreement and Article 6quinquies of the Paris Convention (1967) as incorporated into the TRIPS Agreement in its first written submission, the United States submits that nothing in those two Articles requires the United States to accept the registration or renewal of trademarks, if the person registering or renewing the trademark registration is not the true owner of the trademark under US law. The United States claims that neither the TRIPS Agreement nor the Paris Convention dictates who Members must recognize as the owner of a trademark; that decision is left to the domestic law of the Members.
4.25.
Given that the arguments presented by the United States, and subsequently by the European Communities, concerning the determination of the owner of a trademark are relevant to several inconsistencies between Section 211 and the TRIPS Agreement alleged by the European Communities, these arguments are presented below in a thematic manner in Section D.2 of this part of the report.
4.26.
As regards Article 15.1 of the TRIPS Agreement, the United States contends that Section 211(a)(1) is not inconsistent with its provisions. Article 15.1 defines eligible subject matter of trademarks and limits the ability of Members to claim that a trademark is not capable of constituting a trademark, and is therefore not eligible for registration, because of the form of the trademark. It does not contain an affirmative obligation to register all eligible trademarks. For instance, under Article 15.1, a Member could not refuse trademark registration on the grounds that it is made up of personal names, or of letters, or on other grounds related to form, so long as the signs of which the trademark is composed are capable of distinguishing the goods or services or one undertaking from another. Article 15.2 emphasizes that this does not mean that a Member is prevented from denying registration of a trademark on other grounds, provided such other grounds do not derogate from the provisions of the Paris Convention.
4.27.
The United States argues that the restrictions imposed by Section 211(a)(1) are not based on the form of the trademark. Section 211(a)(1) is concerned with trademarks, regardless of the form, that are similar or identical to trademarks used in connection with assets confiscated without compensation, and are being registered without the permission of the original owner. It relates solely to the rights of the person registering the trademark to assert an ownership interest in that trademark. For this reason, Section 211(a)(1) is not inconsistent with Article 15.1.
4.28.
The United States further argues that if one would assume, for the sake of argument, that Article 15.1 of the TRIPS Agreement could be interpreted as imposing on Members an independent affirmative obligation to register those trademarks that it declares "eligible for registration", such an obligation would be limited by Article 15.2, which provides that Article 15.1 does not "prevent a Member from denying registration of a trademark on other grounds, provided that they do not derogate from the provisions of the Paris Convention (1967)". Therefore, Article 15.1 does not prevent a Member from denying registration of a trademark on other grounds, as long as doing so is not inconsistent with the Paris Convention. Because nothing in Section 211(a)(1) is inconsistent with the Paris Convention, Section 211(a)(1) is not inconsistent with TRIPS Article 15.1.
4.29.
The European Communities disagrees with the United States' assertion that Article 15.1 of the TRIPS Agreement contains a simple definition of a trademark. The European Communities claims that such a reading of this provision would lead to, in its view, absurd result that a WTO Member does not have an obligation to allow trademarks to be registered and protected in the first place. When looking at the ordinary meaning of the words used in Article 15.1 and reading it together with Article 16 of the TRIPS Agreement there can be no reasonable doubt that Article 15.1 stipulates an obligation on WTO Members to register trademarks which meet the requirements set out in this provision. This is further confirmed by looking at Articles 6 and 6quinquies of the Paris Convention.
4.30.
The European Communities claims that registration under Article 15.2 can only be refused in the exceptional cases expressly mentioned in TRIPS and the Paris Convention. Such provisions can be found in Articles 22.3, 23.2 and 24.5 of the TRIPS Agreement, and Articles 6(2), 6ter and 6quinquies B of the Paris Convention. In the absence of a specific optional or mandatory exception, a request for registration has to be granted under Article 15.1 of the TRIPS Agreement. It submits that the United States has not invoked any specific exception provided for under TRIPS or the Paris Convention to justify Section 211(a)(1). In its view, in the absence of a specific optional or mandatory exception, a request for registration has to be granted under Article 15.1 the TRIPS Agreement and registrations have to be indefinitely renewable; as regards the renewal of registrations, the European Communities refers to Article 18 of the TRIPS Agreement.
4.31.
The Panel requested the European Communities to clarify its position as to whether Article 15.1 precludes a Member from (a) determining any requirements concerning the capacity or eligibility of a natural or legal person to file a trademark application; (b) requiring, in case a legal entity files an application, that such legal entity complies with the formalities and substantive requirements under its law concerning the existence of a legal person; or (c) requiring the registrant to be an undertaking having its own industrial or commercial assets. In response, the European Communities submits that Article 62 of the TRIPS Agreement allows WTO Members to require compliance with reasonable procedures and formalities as a condition for the acquisition or maintenance of intellectual property; and that sub-questions (a) and (b) appear to be covered by Article 62 of the Agreement. On sub-question (c), the European Communities submits that the conditions would appear to be more of a substantive nature and would thus not be covered by Article 62. The European Communities argues that as concerns the "undertaking" quality of the registrant, this would appear to be the normal requirement for a trademark owner; and that from a purely logical point of view any "undertaking" must necessarily have some minimal assets in order to pursue its activities (e.g., one staff and telephone); but that a requirement that the applicant has his own industrial or commercial assets would not appear to be permissible under Article 15.1, since it would appear that an applicant who produces or distributes his goods with the help of subcontractors with their material and staff assets is fully entitled to the benefits of Article 15.1.
4.32.
The United States asserts that the European Communities is wrong to claim that TRIPS Article 15.1 contains an affirmative obligation to register all trademarks regardless of whether a Member considers the registrant to be the true owner of the trademark. That a sign is "capable of constituting a trademark", does not create an obligation to accept the registration of that trademark by whoever wants to register it. The text of Article 15.1 is clear, and it is the text that is the starting point in any interpretation of an agreement, under the customary rules of interpretation reflected in the Vienna Convention. Article 15.1 limits the ability of Members to refuse registration of trademarks based solely on the signs of which it is composed. It does not require a Member to register a trademark that does not, under the laws of the Member, belong to the person applying for registration. In other words, Article 15.1 might prevent a Member from declaring that particular signs are ineligible to be trademarks. There is nothing in Article 15.1 that prevents a Member from declaring that confiscating entities cannot claim an ownership interest in trademarks associated with a confiscated asset.
4.33.
The United States argues that under Article 15.1, entitled "protectable" ‑ not "protected" ‑ subject matter", any sign or combination of signs capable of distinguishing goods is "capable" of constituting a trademark. In other words, a Member cannot reject a registration based on a contention that a qualifying sign or combination of signs is not "capable" of constituting a trademark. Nowhere does Article 15.1 require a Member to register and protect all signs or combinations of signs that are capable of constituting a trademark. And despite the European Communities' reference to "indirect guidance", Article 15.1 says absolutely nothing about who is the proper owner of the trademark. The United States claims that Article 15.1 stands for the proposition that the signs must be capable of distinguishing the goods of one undertaking from those of another in order to function as a trademark. But this says nothing about whether a particular undertaking must be considered to "own" the trademark. Signs that are capable of distinguishing the goods of one entity from those of another might be claimed by two different entities; Article 15.1 says nothing about which of the two (if either) owns the trademark; it only says that the trademark cannot be rejected on the grounds of its form.
4.34.
The United States submits that Section 211(a)(1) has nothing to do with whether certain signs are capable of constituting trademarks; it has only to do with who may assert the rights in such a trademark. It is, therefore, not inconsistent with Article 15.1 of the TRIPS Agreement.
4.35.
The United States argues that Article 15.1 simply does not answer the question of who is the owner of the trademark. The fact that there are, in all Members, opportunities to challenge the registration based on the true ownership of the trademark means that a Member is not obliged to register a trademark in the name of a particular person, just because the trademark is made up of signs making it "capable of constituting a trademark" under Article 15.1.
4.36.
The United States further argues that Article 15.2 makes it clear that Article 15.1 does not prevent a Member from denying registration of a trademark on grounds other than its form, provided that those grounds do not derogate from the provisions of the Paris Convention. As the Paris Convention does not dictate national laws on the ownership of trademarks, any denial of a trademark registration on grounds of lack of ownership does not derogate from the provisions of the Paris Convention.
4.37.
The United States claims that Paris Convention Article 6quinquies and TRIPS Article 15.1 are the only two Articles that the European Communities alleges are violated by Section 211(a)(1). The United States submits that both of these Articles limit the ability of Members to reject trademark registrations based on deficiencies in the form of the trademark. Neither imposes any limits on the ability of Members to reject registrations because the registrant is not the true owner of the trademark.
4.38.
The United States argues that there is no support in the text of Article 15.1 for the EC assertion that Article 15.1 requires that any sign or combination of signs "capable" of being a trademark be registered. The text of Article 15.1 only defines the signs that must be considered eligible subject matter for protection as trademarks. The United States similarly argues that there is no support for the contention that registration can only be refused in the "exceptional cases expressly mentioned in TRIPS and the Paris Convention". In the view of the United States, that is not what Article 15.2 says. Article 15.2 clarifies that Article 15.1 ‑ defining the form of a trademark ‑ does not prevent Members from denying registration of a trademark on other grounds ("other", that is, than the form of the trademark). It adds that, of course, those grounds must not derogate from the Paris Convention. This is very different from saying that registration may only be denied on particular specified grounds set forth in particular named sub-Articles of the Paris Convention. The Paris Convention does not prescribe any rules that say that Members must give ownership rights to confiscating entities. Therefore, denying a trademark registration on the grounds that the registrant is not the true owner of the trademark is not inconsistent with Article 15.1, and does not derogate from any provision of the Paris Convention under Article 15.2.
4.39.
The United States submits that the European Communities offers no "exception" to TRIPS Article 15.1 that would permit a Member to determine that it will not give effect in its territory to a foreign confiscation. It claims that, under the European Communities' interpretation, Article 15.1 does not permit a Member to decide that the confiscating entity is not the owner of the trademark used in connection with the confiscated assets.
4.40.
The United States contends that Section 211(a)(1) does not require the United States to take any actions inconsistent with its TRIPS obligations. It submits that Section 211(a)(1) makes OFAC general licences unavailable for certain trademark registrations and renewals, i.e., those trademarks that are identical or substantially similar to trademarks used in connection with a business or assets that were confiscated and for which the consent of the original owner of the trademark has not been obtained. This provision does not randomly deny the registration of trademarks. It focuses on those trademarks that were used in connection with an asset confiscated by the Cuban Government, and on the original owners of those trademarks. It protects the original owners of those trademarks by saying that the confiscating entity or its successorsmust get the consent of those owners before it can take advantage of a general OFAC licence to register or renew the trademark. It does not say those trademarks cannot be registered or renewed: it simply says that the consent of the original owners must be obtained to take advantage of a general licence.15

(b) Section 211(a)(1) of the OAA in relation to Article 6quinquies (A)(1) of the Paris Convention (1967) as incorporated into the TRIPS Agreement

4.41.
The European Communities argues that Article 6quinquies (A)(1) of the Paris Convention (1967) as incorporated into the TRIPS Agreement means, "in practical terms", that "whenever a trademark is duly registered in the country of origin, the other countries of the Union are obliged to accept and protect it". In the view of the European Communities, all trademarks duly registered in their country of origin are covered, independently of issues of form of the trademark. It claims that Section 211(a)(1) prevents the owner of a mark registered in another WTO Member or a party to the Paris Union from obtaining and maintaining in force a trademark registration within the United States. Section 211(a)(1) forecloses the possibility of performing an act (i.e., payment of required fees) that is a prerequisite to obtaining a registration or a requirement for maintaining the registration in force. There exists no possibility for the holder of a mark "duly registered" in another country that is party to the Paris Convention or is a WTO Member and which is included in the scope of Section 211 to register the mark in the United States.16
4.42.
Therefore, in the view of the European Communities, Section 211(a)(1) is at variance with the US obligations under Article 2.1 of the TRIPS Agreement together with Article 6quinquies A(1) of the Paris Convention (1967).
4.43.
The United States argues that, contrary to the assertions of the European Communities, Article 6quinquies of the Paris Convention (1967) does not force the United States to register and protect all trademarks duly registered in a Member country of origin when the registrant traces its ownership "right" to the trademark to an uncompensated confiscation and when the United States does not recognize such a right under US law. In its view, it is simply incorrect that Article 6quinquies leaves no latitude to US domestic law to determine whether the original owner – the one whose business or assets were taken from him without compensation – is the true owner of the trademark right in the United States.
4.44.
The United States argues that, in fact, Article 6quinquies provides a limited exception to the rule that it is the Member's national laws that determine the conditions for filing and registration of trademarks. It in no way interferes with the United States' ability to determine whether the applicant is the proper owner of the trademark. Article 6(1) of the Paris Convention sets forth the general rule that "[t]he conditions for the filing and registration of trademarks shall be determined in each country of the Union by its domestic legislation". Articles 2 and 3 of the Paris Convention guarantee to all nationals of other Members the same rights that a Member grants to its own nationals (national treatment).
4.45.
The United States adds that Article 6quinquies, by contrast, is aimed at the exceptional circumstance in which a national of a Member, who has a registered trademark in his country of origin, claims better than national treatment with respect to a registration of his trademark in its original form in another Member. This provision was necessary because of differences in domestic legislation with regard to the form of the trademark. Where, for instance, domestic legislation prohibited foreign words or simple numbers or letters from being registered as a trademark, a national of one Member might be precluded from registering his trademark even under national treatment principles. This was contrary to the interests of owners of trademarks and the public in having the same trademark apply to the same goods in various countries.
4.46.
The United States argues that, to address this situation, in which a trademark registered in one Member might not otherwise be registerable in another member because of its form (e.g., because it is in a foreign language or contains numbers), Article 6quinquies provides an exceptional "national treatment 'plus'" avenue:

"Every trademark duly registered in the country of origin shall be accepted for filing and protected as is [in the authentic French text, telle quelle] in the other countries of the Union, subject to the reservations indicated in this Article."

4.47.
In the US view, the phrase "as is", or "telle quelle" in the authentic French text of the Convention, is important in defining the scope of Article 6quinquies. According to one commentator, Professor Bodenhausen, "telle quelle" in the original Convention of 1883 meant "in its original form", and the Final Protocol to that Convention made clear that the scope of what was later to become Article 6quinquies was limited to situations in which domestic law would refuse to protect a trademark solely because of the signs of which it is composed:

"Paragraph 1 of Article 6 should be understood in the sense that no trademark may be excluded from protection in one of the States of the Union for the sole reason that it does not comply, with regard to the signs of which it is composed, with the conditions of the laws of that State, provided it complies on this point with the laws of the country of origin and that it has been properly filed there. Subject to this exception, which only concerns the form of the mark, and subject to the provision of the other Articles of the Convention, each State shall apply its domestic law."17

4.48.
The United States submits that, under the exceptional circumstances in which Article 6quinquies is invoked, therefore, Members are obliged to accept trademarks duly registered in the country of origin for filing and registration, if the only objection to the trademark is that it does not comply with the provisions of domestic law concerning the permissible form of a trademark. Nothing in Article 6quinquies prevents Members from applying other provisions of their domestic law to trademark applications under Article 6(1) of the Paris Convention.
4.49.
The United States argues that nothing in Article 6quinquies requires the United States to accept for filing and protection trademarks that, although duly registered in the country of origin, are not duly registered by the persons that the United States considers under its domestic laws to be the proper owners of the trademark. The exceptional circumstance represented by Article 6quinquies – where the United States might be required to accept a trademark that is inconsistent with US law as to the form of the trademark – cannot reasonably be read to require the United States to accept and protect a trademark filed by the person who, under US law, is not the legitimate owner.
4.50.
The United States adds that even assuming, for the sake of argument, that the scope of paragraph (A)(1) of Article 6quinquies of the Paris Convention could be interpreted as not being limited to the form of a trademark, Section 211(a)(1) would still not be contrary to this Article, because of the exceptions or reservations set forth in paragraph (B) of the same Article.
4.51.
The United States submits that, under Article 6quinquies (B), the Members of the Paris Union have reserved the right to deny registration to, or to invalidate, a foreign-origin trademark when such a registration would be "contrary to […] public order". It is plain that any exception based on ordre public would include the principle of non-recognition of foreign confiscations.18 In the US view, the customary international law on expropriation is clear: a State may not expropriate private assets of nationals of other States in its territory unless the expropriation is (1) for a public purpose, (2) on a non-discriminatory basis and in accordance with due process of law, and (3) subject to prompt, adequate and effective compensation. It is on the basis of ordre public that courts in Europe, the United States, and elsewhere around the world have refused to give effect in the forum to claims of title based on a foreign confiscation. In particular, courts in many countries of the world ‑ and in particular those in Europe and in the United States ‑ have declined to recognize claims to title to trademarks that were expropriated without compensation. While courts justify their decisions in accordance with the technical peculiarities of each system, the conclusions they reach are consistent: the forum will refuse to give extraterritorial effects to a claim of title derived from a foreign confiscation because such confiscation is contrary to the ordre public of the forum.
4.52.
The United States submits that Section 211 reflects the principle that no extraterritorial effect will be given to a claim of title based on a foreign confiscation. If Section 211(a)(1) restricts the recognition of a claim of title based on a foreign confiscation, in so doing, it properly prevents the application in the United States of a foreign confiscatory decree. Indeed, giving telle quelle protection to a foreign-origin trademark that has been confiscated by a foreign government would amount to giving extraterritorial effect in the United States to the foreign confiscation. Neither TRIPS nor the Paris Convention requires the United States to do this. Accordingly, even if the Panel came to the view that Article 6quinquies (A)(1) contains an obligation to register and protect a trademark on behalf of a person that the United States does not consider the owner of the trademark ‑ a view that the United States believes is incorrect ‑ the ordre public exception in Article 6quinquies (B) would excuse the United States from such an obligation where the result would be to give extraterritorial application to foreign confiscations. Therefore, Section 211(a)(1) cannot be inconsistent with the obligations of the United States under Article 6quinquies of the Paris Convention.
4.53.
In response, the European Communities argues that it is true that questions of form played a certain role in the Diplomatic Conference that adopted Article 6quinquies A(1) of the Paris Convention. However, in WTO dispute settlement procedures, the interpretation of the norms at stake is based on the international customary rules of treaty interpretation codified by the Vienna Convention. On this basis, the words of Article 6quinquies A(1) are to be given their ordinary meaning, in their context and in the light of the treaty's object and purpose. The text of Article 6quinquies A(1) unequivocally states that "every trademark duly registered in the country of origin shall be accepted for filing and protected as such in the other countries". The European Communities argues further that Article 6quinquies B, in particular its sub-paragraph B(3), is not limited to the form of a trademark. An issue of form would for example concern the use of a certain language or script for visual signs. For the European Communities it would appear difficult to imagine situations in which the use of a certain language or script in itself would be contrary to morality or public order. In the EC view, it is rather the deceptive impression which all aspects of the signs or combination of signs have on the public, which determine whether or not trademarks are contrary to morality or public order.
4.54.
According to the European Communities, a respected commentator to the Paris Convention, which is also cited by the United States, supports the interpretation19 that pleads for a comprehensive duty for registration and protection.
4.55.
The European Communities adds that even if the US interpretation were acceptable, Section 211(a)(1) would continue to be at variance with Article 6quinquies A(1), because it denies registration also for such trademarks which would meet the particular circumstances as to form claimed by the United States.
4.56.
The Panel requested the European Communities to clarify its position as to whether Article 6quinquies precludes a Member from (a) determining any requirements concerning the capacity or eligibility of a natural or legal person to file a trademark application; (b) requiring, in case a legal entity files an application, that such legal entity complies with the formalities and substantive requirements under its law concerning the existence of a legal person; or (c) requiring the registrant to be an undertaking having its own industrial or commercial assets. The European Communities responded that the answers it gave to a similar question concerning Article 15.1 of the TRIPS Agreement would appear to also apply to applications made on the basis of Article 6quinquies of the Paris Convention.20
4.57.
The European Communities argues that Article 6quinquies B of the Paris Convention allows in well-defined circumstances the refusal of the registration of trademarks. The denial is in particular permissible if the trademark is contrary to morality or public order and of a nature to deceive the public. The European Communities emphasizes that it is the trademark for which registration or protection is sought which must be contrary to morality or public order. This defect must directly attach to the trademark and its perception by the public and does not attach to its owner.21 The fact that a trademark is the same or similar to one that has been confiscated cannot by itself have a deceptive effect vis-à-vis the public. In its view, the Havana Club case is a good illustration that foreign confiscations do not affect the good morality or public order of a trademark or trade name, because this trademark has been duly registered by the USPTO. If this trademark had been considered as immoral, deceptive or scandalous, the USPTO would have had to refuse the registration ex officio under Section 2 of the Trademark Act. The European Communities claims that it is difficult to see for what reasons but for the introduction of Section 211 it had now become all of a sudden contrary to morality or public order after having existed for several decades unchallenged.
4.58.
The European Communities reiterates that Section 211 applies to trademarks which have never been the object of a confiscation by a foreign country. It would appear obvious that in this respect Article 6quinquies B(3) cannot be invoked to excuse Section 211, even if one were to accept the US argument.
4.59.
In the view of the European Communities, Article 6quinquies represents a limited exception to the territoriality principle, because it requires a country to accord rights as a consequence of the existence of rights in another country. In other words, a trademark has to be registered and protected, because a trademark exists in another country. In the view of the European Communities, the country where registration is sought has under this provision no right to question the existence of a trademark in the hands of an owner as defined by the laws of the country of origin. The European Communities adds that, once granted, the new trademark will become fully subject to the principle of territoriality and independence from the trademark in the country of origin.
4.60.
The United States notes that the European Communities cited with approval the treatise by a respected commentator on the Paris Convention, Professor Bodenhausen, at page 110, which the European Communities termed a plea "for a comprehensive duty for registration and protection". The European Communities reads this as an interpretation that Article 6quinquies applies broadly to matters other than form. In the US view, what the European Communities neglected to say, however, is that Professor Bodenhausen is very clear on pages 110 and 111 that Article 6quinquies goes to the form of the trademark. Recalling that it has quoted an extensive passage to that effect in its written submission,22 the United States adds that Professor Bodenhausen further elaborates as follows on pages 110 and 111, which follows an initial discussion of Article 6quinquies:

"This leads to the following conclusions:

Whenever a trademark is duly registered in the country of origin, the other countries of the Union are obliged to accept and protect it, even if, as regards its form, that is, with regard to the signs of which it is composed, such trademark does not comply with the requirements of the domestic legislation, subject to the additional rules, particularly the grounds for refusal or invalidation of any mark, considered on its individual merits, established in the Article. This rule will therefore apply to trademarks consisting of numbers, letters, surnames, geographical names, words written or not written in a certain language or script, and other signs of which the trademark is composed."

4.61.
And further down on page 111:

"Member States are equally free, regardless of Article 6quinquies, to apply to trademark applications other provision of their domestic law not concerning the signs of which a trademark is composed, such as a requirement of previous use of the mark, or the condition that the applicant must possess an industrial or commercial enterprise."23

4.62.
The United States sums up by asserting that Article 6quinquies of the Paris Convention does not prevent a Member from denying registration of a trademark duly registered abroad, where the registrant is not the true owner of the trademark.
4.63.
The United States reiterates that Article 6quinquies A of the Paris Convention limits the ability of Members to deny protection to trademarks on the grounds that the form of the trademark is inconsistent with national rules. Under Article 6quinquies, a Member cannot refuse to register or protect a trademark duly registered in its country of origin on the grounds that the trademark does not conform to national rules as to the form of the trademark. In the words of Article 6quinquies, such a trademark shall be accepted for filing and protected "telle quelle", which means "as is" or "in its original form": the trademark, in other words, does not have to be changed to conform to national laws on trademark form. In the US view, any interpretation of this obligation extending it to matters beyond the form of the trademark would impermissibly read the key words "telle quelle" out of this Article. Such an interpretation would also ignore the object and purpose of the Article — to prevent denials based on the form of the trademark. In sum, an examination of the ordinary meaning of the terms of Article 6quinquies A, read in their context, and in light of their object and purpose, establishes that the European Communities' interpretation is incorrect. The United States further argues that the material provided by WIPO on this provision's negotiating history confirms this. Under the customary rules of interpretation of international law, as reflected in Article 32 of the Vienna Convention, the WIPO materials may serve this confirmatory role.
4.64.
The United States adds that Section 211 has nothing to do with the form of the trademark, and everything to do with the ownership of the trademark.
4.65.
According to the United States, the European Communities claims that Article 6quinquies A requires the United States to "accept for filing and protect" a trademark that has been confiscated in the country of origin, so long as it is duly registered there. The United States interprets this to mean that if the government of a Member confiscates the business assets of a company, including its duly registered trademarks in that Member (the country of origin), Article 6quinquies would, according to the European Communities, require all other Members to accept for filing and protect that trademark in their territories. The United States argues that this is tantamount to requiring Members to give effect in their own territory to foreign confiscations of trademarks. For example, if Member A confiscates a company in its territory, including its trademarks, and asks Member B to protect an existing trademark in the name of the confiscated company, the European Communities' interpretation of Article 6quinquies A is that Member A would be required to do so, and thereby to give effect, in its territory, to the confiscation. The United States adds that, yet, the European Communities concedes that Members are not obligated to give such effect under the TRIPS Agreement or the Paris Convention. In short, the European Communities' extraordinarily broad reading of Article 6quinquies leads to a result that both parties agree is wrong.
4.66.
According to the United States, the European Communities has suggested that this – in the US view undeniably incorrect ‑ result can be avoided by invoking the "exceptions" provision in paragraph B(1) of Article 6quinquies, which permits a Member to invalidate or avoid registering trademarks "when they are of such a nature as to infringe rights acquired by third parties in the country where protection is claimed".
4.67.
The United States recalls its view that Article 6quinquies A does not undercut the principle that Members do not have to give effect in their territories to foreign confiscations. It argues that this provision deals only with issues of "form" and there is no need, absent the European Communities' misreading of this provision, to resort to "exceptions" to preserve this important principle. The WIPO materials show that, in negotiating the original version of Article 6quinquies, the delegates specifically rejected the use of the word "property" in this Article, because they agreed that the provision did not address the question of trademark ownership.24 The United States further argues that, even if the Panel were to resort to the Article 6quinquies exceptions to preserve this important principle, it is not at all clear why it should resort to the exception for "rights acquired by third parties" under Article 6quinquies B(1), rather than the exception for "ordrepublic" under Article 6quinquies B(3). The United States submits that the European Communities has not cited a single situation in which "rights acquired by third parties" have been used to justify the non‑recognition of foreign confiscations, whereas the United States has cited scores of decisions in which "ordrepublic" has been cited as the reason for not giving effect to foreign confiscations. It seems apparent that if the Panel has to resort to an exception to Article 6quinquies A to preserve this important principle – which the United States believes not to be necessary ‑ the exception for "ordrepublic" is the appropriate exception. Furthermore, the United States argues that there is no support for the European Communities' suggestion that the "ordrepublic" exception is limited to situations in which the trademark deceives the public. It is clear from the text of Article 6quinquies that trademarks that deceive the public are just one of the kinds of trademarks included within the morals and "ordrepublic" exception. Moreover, numerous courts throughout the world have found that giving domestic effect to foreign confiscations, including with respect to trademarks, is against "ordrepublic".25
4.68.
The United States adds that, perhaps more significantly, the exception under Article 6quinquies B(1) says nothing about how a Member makes the determination that the "third parties" have acquired rights that would be infringed by the foreign trademark. Even if the Panel were to adopt the European Communities' strained reading of Article 6quinquies B(1), that Article says nothing about how a Member is to determine who the true owners of the US trademark are whose "acquired" rights would be infringed. Article 6quinquies B(1) leaves this decision to the national laws of the Members. The United States argues that, therefore, even if the European Communities' construction of Article 6quinquies were correct, the Panel is still left with the conclusion that, under Article 6quinquies B(1), it is up to the national laws of the Members to determine who the proper owner of the trademark is, a determination that is not dictated by either the Paris Convention or TRIPS. Thus, the European Communities ends up where the United States began.
4.69.
The United States does not share the European Communities' view that if TRIPS does not dictate trademark ownership rules, the disciplines of TRIPS are worthless. In the United States' view, the TRIPS Agreement contains numerous disciplines that prevent arbitrary allocations of trademark ownership, including national treatment, most-favoured-nation treatment, and many procedural protections. Members' national rules on ownership issues may differ in the context of other intellectual property rights covered by TRIPS, and these acknowledged differences have not undermined the TRIPS disciplines. Nevertheless, even if the lack of ownership rules were a flaw in the Agreement, the European Communities' interpretation of Article 6quinquies B(1) would not address any such flaw in the slightest, because it does not determine how a Member decides that third parties have acquired rights. In other words, it does not result in the application of any additional disciplines on ownership. The United States claims that the European Communities arrives at the same conclusion as the United States: that Members are entitled to determine who is the proper owner of a trademark in their territory and have the right to prevent confiscating entities from asserting such ownership rights.

2. Section 211(a)(2) of the OAA26

4.70.
The European Communities claims that Section 211(a)(2) prevents the owner of a registered US trademark or the owner of a trade name from using a US court to enforce its rights. As such, the measure denies standing to certain owners of US rights to initiate or maintain proceedings in a US court to enforce the rights conferred on these parties through the Lanham Act. Since such rights, whether in the form of Federal trademark registrations or rights in trade names, may only be enforced through actions in a Federal court, this measure operates to foreclose any judicial recourse for actions that would infringe such rights.
4.71.
The United States submits that Section 211(a)(2) provides that "[n]o court shall recognize, enforce, or otherwise validate any assertion of rights by a designated national based on common law rights or registration obtained under [the OFAC general licensing provision discussed above] of such a confiscated mark, trade name or commercial name". In plain terms, anyone who traces "rights" in a US trademark to a confiscation in Cuba may not have those purported rights recognized or enforced by US courts. Section 211(b) contains a similar provision with respect to persons who claim trademark, trade name or commercial name rights in the United States by virtue of a trademark registration in a Member country. In other words, under Section 211(b), a confiscating entity, or its successors in interest, cannot – by virtue of having confiscated a business and duly registering its trademark in Cuba – claim ownership rights to that trademark in the United States. The European Communities claims, incorrectly, that these provisions are inconsistent with a number of TRIPS provisions.

(a) Section 211(a)(2) of the OAA in relation to Article 16.1 of the TRIPS Agreement

4.72.
The European Communities argues that, given that trademarks as all other intellectual property rights are primarily enforced in the United States, like in most WTO Members, in the civil judicial system, the denial of access to the US Court system for certain trademark owners is tantamount to depriving the right holders of their exclusive rights altogether. There exists no other legal or practical way to prevent third parties not having the owner's consent from using in the course of trade identical or similar signs in the United States than the possibility to have recourse to the US judicial system.
4.73.
The United States responds that Article 16.1 of the TRIPS Agreement confers certain rights on the "owner" of a "registered trademark", notably the exclusive right to prevent third parties not having the owner's consent from using the trademark under certain circumstances. Sections 211(a)(2) and (b) can only violate Article 16.1, therefore, if they prevent the owner of a registered trademark from asserting his exclusive rights vis-à-vis third parties. Sections 211(a)(2) and (b) do not do this, for two reasons. First, under Section 211, a person who traces his "rights" to an uncompensated confiscation is not an owner of the trademark under US law, and is in no position to assert any rights under TRIPS. Nothing in TRIPS requires the United States to confer ownership status on a person who traces his purported ownership status to an uncompensated confiscation. Second, with respect to the assertion of "common law rights" under Section 211(a)(2) – i.e., those rights based not on registration, but on use ‑ these are not rights sought by "the owner of a registered trademark", which are the rights guaranteed by Article 16.1, but are rights sought by the owner of a common law trademark.
4.74.
The United States argues that, with respect to the first point, TRIPS Article 16.1 clearly distinguishes between the registered trademark, on the one hand, and the owner of the trademark, who may assert his rights, on the other. Where a person is the owner of a trademark, and that trademark is registered by that owner, TRIPS guarantees that person exclusive rights to prevent third-party use. However, it may be, under Article 16.1, that the "owner" of the trademark is not the same as the person who has registered the trademark. While a US federal trademark registration carries with it the legal presumptions of ownership, validity, and priority, all of these presumptions are subject to challenge. If a person other than the registrant can show a superior claim to the trademark based, for example, on prior use, that person can be adjudged the true "owner" of the trademark. Article 16.1 specifically anticipates that the owner of the trademark ‑ the person in a position to assert exclusive rights under domestic law ‑ may be someone other than the registrant.
4.75.
The United States submits that this is clear from the last sentence of Article 16.1, which states that the rights guaranteed by Article 16.1 do not "affect the possibility of Members making rights available on the basis of use". That sentence also provides more generally that the Article 16.1 rights "shall not prejudice any existing prior rights".27 Aside from the specific mention of rights acquired by use, Article 16.1 does not specify what are the other "existing prior rights" that are not prejudiced by the Article 16.1 rights. The determination of existing prior rights, like the determination that trademark rights are acquired through use, is a question of national law not dealt with in the TRIPS Agreement.
4.76.
The United States asserts that, in light of this interpretation, it is plain that Sections 211(a)(2) and (b) are not inconsistent with TRIPS Article 16.1.
4.77.
The United States submits that Section 211(a)(2) provides that if a "designated national" – essentially the Cuban government, Cuban nationals, and their successors in interest – (1) has obtained a trademark registration under a general OFAC licence, and (2) the trademark is identical or similar to a trademark used in connection with a business confiscated without compensation by the Cuban Government, US courts will not recognize, enforce or otherwise validate any assertion of trademark rights by that person. Under Section 211(b), if a designated national has obtained a registration in his country of origin for such a trademark (that is, a trademark used in connection with a confiscated business), and asserts ownership rights to that trademark in the United States by virtue of the foreign registration, US courts will not recognize, enforce, or otherwise validate that assertion of rights.
4.78.
The United States argues that this is not inconsistent with Article 16.1. Although the United States is not enforcing the trademark for the benefit of the trademark registrant, it is not denying exclusive rights to the "owner" of the registered trademark, which is the obligation set forth in Article 16.1. This is because, under US law, the successor to the confiscating entity is not the "owner" of the trademark in the United States. Whether to confer ownership status on a claimant to a trademark right is a matter that is reserved to the domestic law of the Member. TRIPS simply has nothing to say about the substantive issue of trademark ownership.28 If the United States decides that confiscating entities that have provided no compensation for the property confiscated or their successors in interest cannot exercise the rights of ownership to the trademark associated with the confiscated business in the United States, it is fully within the authority of the United States to do so. There is no TRIPS provision that limits that right. Once a Member recognizes that the registrant is the owner of the trademark, TRIPS requires the Member to grant certain rights to that owner. Until that happens, it does not.29
4.79.
The United States submits that the plain language of Article 16.1 clearly envisions that, under domestic law, the rights of ownership may be given to someone other than the registrant. Further, it is inconceivable that the TRIPS negotiators intended, by means of Article 16.1, to reverse the established principle of US law against giving domestic effect to foreign uncompensated confiscations. According to the United States, this principle has been in effect in the much of the world, including the United States and Europe, for nearly one hundred years, and has been much in force and in evidence throughout the post-World War II period. There is no indication in the TRIPS text, or in its object and purpose, of any intention to overturn this long-standing principle.
4.80.
The United States argues that Article 16.1 has as its object and purpose to define and protect the rights of the owner of a trademark, not to limit the ability of Members to determine who the owner is. In other words, the contribution of TRIPS Article 16.1 was enhanced enforcement of intellectual property rights, not curtailment of a sovereign nation's authority to determine who may assert those rights. Article 16.1 especially did not curtail such rights with respect to the basic decision whether to recognize uncompensated foreign confiscations.
4.81.
The United States notes that the European Communities appears to argue that the extraterritorial effect of uncompensated confiscations is not the issue.30 In the US view, the European Communities appears to concede that sovereign nations are entitled to refuse recognition foreign uncompensated confiscations at the time the confiscation takes place; for the European Communities, the issue presented by Section 211 is whether, after a foreign confiscation takes place, and after the original owner has abandoned his trademark, the United States can still prevent the confiscating entity from owning US trademark rights.
4.82.
In the view of the United States, this argument draws a false distinction. Whether TRIPS has, despite its silence, overturned the principle against giving domestic effect to foreign confiscations is, indeed, the issue. The United States argues that either Article 16.1 takes away the ability of sovereign nations not to recognize the ownership of confiscating entities, or it does not. Nothing in Article 16.1 supports a distinction between the rights of confiscating entities at the time of the confiscation and those rights 20 years later. If, as the European Communities asserts, Article 16.1 says that Members are no longer free to determine who is and who is not the owner of a trademark right, a Member is no freer to make that determination at the time of the confiscation than it is after the trademark has allegedly fallen into the public domain. Article 16.1 does not change the rule that Members get to determine who may claim ownership of a trademark.
4.83.
The United States reiterates that the ordinary meaning of Article 16.1 is that it confers certain exclusive rights to prevent third party use on the owner of a trademark that is registered. If a person is not the owner of the trademark – and ownership is determined under a Member's national laws – Article 16.1 does not confer rights on that person. In the context of Section 211, if a confiscating entity or its successor is not the owner of a trademark, Article 16.1 does not guarantee that entity any rights.
4.84.
According to the United States, the European Communities' interpretation is that Article 16.1 confers exclusive rights on whoever registers the trademark. Article 16.1 might have been drafted to confer exclusive rights on the trademark registrant, but it was not. Instead, it specifically states that its presumptions and entitlements accrue to "[t]he owner of a registered trademark […]". In fact, Article 16.1 could not be clearer that there is a distinction between the owner of the trademark and the trademark registrant: it specifically says that nothing in that Article prevents Members from making rights available based on use. In other words, a Member does not breach Article 16.1 by determining that the true owner of a trademark is the person who first used the mark, and not the person who registered the mark. If the European Communities' interpretation were accurate, Article 16.1 would require Members to give exclusive rights to the registrant, even if the rights based on use were conferred under national law on someone else. This position is directly contradicted by Article 16.1 itself. It therefore simply cannot be accurate that Article 16.1 imposes an obligation to confer rights on whoever registers the trademark.
4.85.
The United States argues that the European Communities' assertion that there is one class of federal trademarks which are "owned" by whoever registers them and another class of trademarks whose ownership is based on use is not credible.31 The very fact that a person can establish his ownership of a trademark based on prior use, and can disprove the ownership of the federal trademark registrant, demonstrates that there are not two distinct "classes" of trademarks. This is a situation specifically anticipated by Article 16.1. The United States argues that the EC interpretation of Article 16.1 ‑ as requiring Members to confer exclusive rights on whoever registers the trademark ‑ is unsupported by the text of that Article. It claims that this interpretation is particularly extreme and troublesome, given that the European Communities also believes that Article 15.1 requires Members to register without question any trademark that consists of qualifying signs, regardless of whether the registrant qualifies as an owner or not under national law, and regardless of whether the registrant claims to own the trademark in the United States on the basis of its ownership of confiscated assets abroad.
4.86.
The United States argues that, given that the obligation imposed by TRIPS Article 16.1 is to confer rights on the "owner" of a trademark that is registered, the Panel must therefore determine whether Sections 211(a)(2) and (b) require actions that are inconsistent with this obligation. In its view, they do not. Sections 211(a)(2) and 211(b) do not deny exclusive rights to the true owners of registered trademarks. Rather, they reflect that courts are not obligated to find the trademark registrant to be the "owner" of the trademark where the registrant claims ownership by virtue of a confiscation and the original owner does not consent. Sections 211(a)(2) and 211(b) do not curtail recognized ownership rights in the United States. To the contrary, they exercise the recognized sovereign right of the United States to determine the criteria for trademark ownership in the United States, and to deny ownership, where appropriate, to those who derive their claim from an uncompensated confiscation.
4.87.
In sum, the United States contends that Sections 211(a)(2) and (b) are not inconsistent with TRIPS Article 16.1, because Article 16.1 confers rights on the owner of a registered trademark, and Section 211 does not limit the rights of the true owners of registered trademarks.
4.88.
The United States adds that, even if the Panel were to find an inconsistency between the rights referred to in Article 16.1 and Sections 211(a)(2) and 211(b), however, these Sections would still be consistent with TRIPS. This is because Article 17 allows WTO Members to make limited exceptions to the rights conferred by a trademark, provided that such limited exceptions take account of the legitimate interests of the owner of the trademark and of third parties. Sections 211(a)(2) and 211(b) would meet these requirements, because each of these provisions applies only to a very narrow and specified class of potential right holders and are therefore "limited". They are also limited in the sense that they merely impose one condition to the enforcement of asserted trademark rights: the consent of the original owner. This consent requirement is directly related to the purpose of the exception, which is to deny extraterritorial effects to a Cuban confiscation. Further, Sections 211(a)(2) and 211(b) take into account the legitimate interests of the owner of the trademark and of third parties. A designated national who claims to own the trademark rights has no legitimate interest in the mark because his claim is based, directly or indirectly, on the confiscation of the business associated with the mark. By contrast, the interest of the dispossessed owner has considerable legitimacy. The original owner created the trademark, first used it on his products, and built its distinctive reputation. The fact that he was deprived of his property, without compensation, by governmental fiat, in no way diminishes the policy justification for protecting his interest in the mark. A consent requirement sufficiently "takes account" of this history and allows the current claimant and the original owner to work out an accommodation of their respective interests. In other words, Section 211 is precisely targeted at the wrong it seeks to address.
4.89.
Commenting on the US arguments relating to Article 17 of the TRIPS Agreement, the European Communities recalls that the panel in Canada – Patent Protection of Pharmaceutical Products had to interpret the term "limited exceptions" as used in Article 30 of the TRIPS Agreement in relation to patents. The panel said that "[t]he term 'limited exception' must therefore be read to connote a narrow exception – one which makes only a small diminution of the rights in question".32 In the EC view, there can be no doubt that the outright denial of judicial enforceability goes well beyond "a small diminution of the rights in question", thus excluding the limited nature of the exception. The findings of the Panel in United States ‑Section 110(5) of the US Copyright Act in relation to "certain special cases" in Article 13 of the TRIPS Agreement33 concerning copyright confirm this result.
4.90.
The European Communities reiterates its view that Section 211 has nothing to do with the denial of effects of foreign confiscations in the United States. Therefore, the US argument concerning legitimate interests of third parties is not on the point. The European Communities argues that it would also appear that by denying any judicial enforceability to the trademark owner, his interests have not been taken account of at all. Finally it would appear to be excluded, also in light of the "fair use" example contained in Article 17 that the interests of a historic owner of an enterprise which has used such a or a similar trademark would qualify as a relevant interest under Article 17 of the TRIPS Agreement. The third parties who would qualify under Article 17 are those who intend to use the trademark, not those who want to prevent its use.

(b) Section 211(a)(2) of the OAA in relation to Article 42 of the TRIPS Agreement

4.91.
The European Communities claims that by expressly denying the availability of US courts to enforce the rights targeted by its provisions, Section 211(a)(2) constitutes a violation of the United States' obligations under the first sentence of Article 42 of the TRIPS Agreement. Article 42 together with Articles 44-46 and 50 of the Agreement require WTO Members to provide remedies expressly stipulated therein. These remedies include injunctions, damages and provisional measures.
4.92.
The United States contends that Sections 211(a)(2) and (b) are consistent with Article 42 of the TRIPS Agreement, which requires WTO Members to make civil judicial procedures available for the enforcement of intellectual property rights covered by the Agreement. The plain text of Article 42 makes clear that it applies only with respect to intellectual property rights "covered by [the] Agreement", i.e., rights that a Member is required to enforce under the Agreement. Article 42 does not require WTO Members to provide right holders with procedures to enforce rights that do not exist. If a purported intellectual property right is not "covered by this Agreement", a Member is under no obligation to enforce it through its civil judicial system. Neither Article 16, nor any other provision of the TRIPS Agreement, addresses the question of who is the legitimate owner of a trademark under a Member's domestic law. Sections 211(a)(2) and (b) merely state that a person that holds no rights in a mark cannot enforce that mark. These Sections, therefore, do not violate Article 42.
4.93.
The United States argues that the same reasoning applies if the Panel finds that Section 211 falls within the TRIPS Article 17 exceptions provision. By definition, where a valid exception to trademark rights applies, such rights cannot be successfully asserted.
4.94.
Consequently, the United States submits that Sections 211(a)(2) and (b) cannot violate Article 42. As the text of Article 42 makes clear, where TRIPS prescribes no right, it certainly does not require a remedy.
4.95.
The United States adds that there can be no serious question that the United States makes available civil judicial procedures concerning the enforcement of intellectual property rights. The US civil judicial system is one of the most developed systems in the world and trademark holders regularly enforce their rights in US domestic courts. Notwithstanding the European Communities' – in the US view ‑ erroneous assertions to the contrary, persons potentially affected by Section 211 do have access to US courts, and have standing to present their case.
4.96.
The United States argues that Sections 211(a)(2) and (b) constitute substantive rules governing the ownership of trademark rights, not jurisdictional or standing rules regarding access to the court system. They do not affect the availability of judicial procedures to any party asserting a right to a trademark. Indeed, in order for a court to find that Section 211 applies, it must make a number of legal determinations ‑ for instance, that the trademark is the same as, or similar to, a trademark used in connection with a confiscated business, that no adequate and effective compensation was paid, and that the person asserting the right is a designated national or a successor in interest. Nothing in Sections 211(a)(2) or (b) precludes the person asserting ownership rights in the trademark from having a full opportunity to substantiate his claim to ownership and to present all relevant evidence.

(c) Section 211(a)(2) of the OAA in relation to Article 6bis of the Paris Convention (1967) as incorporated into the TRIPS Agreement

4.97.
The European Communities argues that Article 6bis (1) of the Paris Convention (1967) mandates the enhanced protection to be granted for so-called well-known trademarks. The European Communities claims that Section 211(a)(2) denies protection to certain trademarks indiscriminately whether or not they are well-known and that it is, therefore, at variance with Article 6bis (1) of the Paris Convention (1967) as incorporated into the TRIPS Agreement by its Article 2.1.
4.98.
The United States contends that Sections 211(a)(2) and (b) are not inconsistent with Article 6bis (1) of the Paris Convention (1967), because it only provides that Members shall undertake to refuse or cancel a registration, or prohibit the use of a trademark, when the competent authorities of that Member consider that the trademark is well-known in that Member's territory "as being already the mark of" another person claiming protection under that Article. Sections 211(a)(2) and (b) only come into play when US courts determine that the US trademark is not, in fact, "the mark of" the confiscating entity or its successors in interest. If, under US law, the confiscating entity does not have any rights of ownership in the trademark, the trademark cannot, as a matter of law, be "well-known as being already the mark of" the confiscating entity.
4.99.
The European Communities claims that there can be no reasonable doubt that Sections 211(a)(2) and (b) deny Cuba, a Cuban national or a foreign successor-in-interest the benefit of Article 6bis of the Paris Convention. These persons will not be able to claim refusal or cancellation of a requested registration nor will they be in a position to prohibit the use of such a trademark.
4.100.
The Panel requested the European Communities to give examples of situations under which Section 211(a)(2) could violate the United States' obligations under Article 6bis (1) of the Paris Convention as incorporated into the TRIPS Agreement. In response, the European Communities says that if the "Havana Club" trademark were not registered in the United States, but the United States would recognize it as a well-known mark in the sense of Article 6bis (1) of the Paris Convention, the operation of Section 211(a)(2) would not allow the owner of this well-known trademark to prevent somebody else from using this trademark in the United States. Given its broad language, Section 211(a)(2) applies to all kinds of trademarks, registered trademarks, common-law trademarks and well-known trademarks.
4.101.
The United States argues that the European Communities has presented no argument whatsoever that Article 6bis requires Members to recognize the trademark ownership of particular entities. In fact, those Articles say nothing about who owns the trademark or trade name. Article 6bis specifically reserves to "the competent authority" of the Member the determination of whether a trademark is well known as the mark of a particular person. The United States submits that the WIPO communication acknowledges that this decision by the competent authorities relates to ownership, but specifies that "no provision [of the Paris Convention] addresses the question how the owner of a trademark has to be determined under the domestic law of [Members]".

(d) Section 211(a)(2) of the OAA in relation to Article 8 of the Paris Convention (1967) as incorporated into the TRIPS Agreement

4.102.
The European Communities argues that Article 8 of the Paris Convention (1967) requires that WTO Members extend protection to trade names independently from whether they form part of a trademark. While Article 8 does not precisely stipulate the way in which this protection for trade/commercial names has to be granted, one of the leading commentators writes that "[t]he protection will generally be given against unlawful acts of third parties consisting, for example, of use of the same or a confusingly similar trade name [...], if such use is liable to cause confusion among the public".34 Indeed, under US law, trade names are protected through a right of action under, among other things, Section 43(a) of the Lanham Act, which permits parties to prevent the use of a trade name in a manner likely to cause confusion or to deceive.
4.103.
The European Communities claims that, in any event, the language of Section 211(a)(2) is of such a sweeping nature that there can be no doubt that the United States does not grant any protection to the trade/commercial names covered by this provision. Thus, the United States does not meet its obligations under Article 2.1 of the TRIPS Agreement together with Article 8 of the Paris Convention.
4.104.
The European Communities underlines the importance it attaches to – in its view ‑ the TRIPS deficient protection (in particular violation of Article 8 of the Paris Convention) in the United States of trade names and commercial names as a consequence of the operation of Sections 211(a)(2) and (b), because a great number of such – in its view often very valuable – US trade names are potentially affected by the curtailments introduced by Sections 211(a)(2) and (b). This economic importance is further highlighted by the fact that the Federal Circuit Court has indeed applied Section 211(b) to the Havana Club trade name and denied protection.
4.105.
The United States contends that Sections 211(a)(2) and (b) are not inconsistent with Article 8 of the Paris Convention because Article 8 merely requires a Member to offer some protection to trade names, without the requirement of filing or registration and regardless of whether it forms part of a trademark. Article 8 does not impose any requirements on the scope of protection, other than, through Article 2 of the Paris Convention, the requirement of national treatment. For this reason alone, Sections 211(a)(2) and (b) do not violate Article 8 of the Paris Convention.
4.106.
In any case, however, it cannot be asserted that the protections given trade names must be more stringent than those given trademarks. Because Sections 211(a)(2) and (b) are not inconsistent with TRIPS or the Paris Convention with respect to trademarks, therefore, they are not inconsistent with TRIPS or the Paris Convention with respect to trade names.
4.107.
The United States adds that the European Communities has presented no argument whatsoever that Article 8 requires Members to recognize the trade name ownership of particular entities. In the US view, Article 8 is silent on the subject.

(e) Section 211(a)(2) of the OAA in relation to Article 3.1 of the TRIPS Agreement and Article 2(1) of the Paris Convention (1967) as incorporated into the TRIPS Agreement

4.108.
The European Communities submits that the language of Article 3.1 of the TRIPS Agreement on "National treatment" is based on Article III(4) of the General Agreement on Tariffs and Trade ("GATT"). However, while national treatment in GATT attaches to goods – not to the respective owners of the goods – it attaches under TRIPS to the person of the right holder. This modified "attachment" is systematically linked to the territorial character of intellectual property rights. In the EC view, the vast jurisprudence on Article III(4) of GATT, under the GATT dispute settlement system as well as under the WTO dispute settlement system, may give valuable insight for the interpretation of Article 3.1 of the TRIPS Agreement. In any event, the basic feature contained in Article 3.1 of the TRIPS Agreement would appear to be straight forward. A WTO Member cannot treat a national of another WTO Member in relation to an intellectual property right which its IPR system offers less favourably than it treats its own nationals in relation to such an intellectual property right.
4.109.
The European Communities argues that Section 211(a)(2) denies the protection of US intellectual property rights to owners who are "designated nationals". A reference in Section 211(d)(1) of the OAA is made to 31 CFR 515,305 which provides that "[f]or the purposes of this part, the term 'designated national' shall mean Cuba and any national thereof including any person who is a specially designated national". Furthermore, Section 211(d)(1) extends the definition of a designated national beyond 31 CFR 515,305 to "[…] a national of any foreign country who is a successor-in-interest to a designated national".
4.110.
The European Communities claims that the language of these provisions makes it utterly clear that Cuba, Cuban nationals and specially designated nationals are denied protection of their US intellectual property rights, while US nationals are enjoying such protection. Furthermore, protection is also denied to a foreign national which is a successor-in-interest to a designated national, while such a successor-in-interest of US nationality benefits from protection. This constitutes a de jure violation of Article 3.1 of the TRIPS Agreement.
4.111.
The European Communities notes that the principle of national treatment is considered to be one of the basic rules of also the Paris Convention (1967), as provided in its Article 2(1). The European Communities submits that the texts of Article 3.1 of the TRIPS Agreement and Article 2(1) of the Paris Convention are not identical. In its view, the former stipulates negatively what a WTO Member may not do, while the latter stipulates positively what a country of the Paris Union has to do, namely, to confer on non-nationals of the country the same advantages conferred by the industrial property laws of that country on its own citizens. The Paris Convention thus imposes a specific obligation for identical treatment for foreign and domestic right holders. The underlying objective of both provisions remains however the same, i.e., to prohibit treatment that differs as a consequence of the nationality of the right holders.
4.112.
The European Communities claims that the de jure discrimination created by Section 211(a)(2) between Cuban right holders, on the one hand, and US right holders, on the other, constitutes as much a violation of Article 2(1) of the Paris Convention (1967) as incorporated into the TRIPS Agreement by a reference in its Article 2.1 as it does in relation to Article 3.1 of the TRIPS Agreement.
4.113.
The European Communities develops its arguments by claiming that Section 211(a)(2) operates a violation of the national treatment principles at two levels:

‑ By expressly curtailing the protection of trademarks and trade or commercial names held by "designated nationals" which means basically Cuba and Cuban nationals, while granting US nationals the full enjoyment of their rights, Section 211(a)(2) creates a first level of discrimination, which constitutes the most obvious violation of the national treatment obligations contained both in TRIPS and the Paris Convention.

‑ At the second level the operation of Section 211(d)(1), which defines the term "designated national", creates a discrimination at the level of successors-in-interest. This provision does expressly deny protection to any foreign successor-in-interest to a Cuban national or Cuba, while allowing US successors-in-interest to Cuban nationals or Cuba the full enjoyment of their trademarks or trade names.

4.114.
The European Communities adds that Articles 3 and 4 also apply to common-law trademarks. Therefore, the curtailments operated by Sections 211(a)(2) and (b) to US common law trademarks are also relevant for the case.
4.115.
In this situation there can, in the view of the European Communities, be no reasonable doubt that Sections 211(a)(2) and (b) are at variance with the US obligations under Article 3 of the TRIPS Agreement and Article 2(1) of the TRIPS Agreement together with Article 2(1) the Paris Convention as well as Article 4 of the TRIPS Agreement.
4.116.
The European Communities argues that this conclusion would be valid even if one were to qualify Section 211 as a measure to address the issue of foreign expropriations. Given that such a measure would undoubtedly affect the "acquisition, maintenance, enforcement and use" of intellectual property rights covered by TRIPS, such measures have to comply with Articles 3 and 4 of the TRIPS Agreement even if one were to argue that they are exempt from the specific obligations under Part II thereof.
4.117.
The European Communities notes that the United States has repeatedly asserted that a US national can never become the owner of a trademark or trade name covered by Sections 211(a)(2) and (b). The European Communities argues that this assertion is false. For purposes of illustration, the European Communities mentions three trademarks/trade names which are owned by US entities and which are the same or substantially the same as trademarks/trade names used in conjunction with expropriated Cuban business. The European Communities submits that Punch and Partàgas trademarks, which were used in conjunction with expropriated Cuban cigar enterprises, are held by US companies and the Cohiba trademark, which has also been used in conjunction with a Cuban cigar enterprise and which was expropriated, is also registered for a US company.
4.118.
The Panel requested to European Communities to indicate what were the particular facts that led the United States to determine the ownership of these three trademarks and, in particular, whether their owners could be the same as the original owners of the confiscated trademarks or their successors-in-title or US nationals that have compensated the original owners. The European Communities responds that it has no information over and above what is contained in the publicly available documents from the USPTO register that it had submitted.
4.119.
The United States contends that Sections 211(a)(2) and (b) are not inconsistent with the national treatment provisions of TRIPS and the Paris Convention. Contrary to the European Communities' assertions, it is simply incorrect to claim that Cuba, Cuban nationals, and specially designated nationals are denied "protection of their intellectual property rights, while US nationals are enjoying such protection", or that foreign nationals who are successors in interest are denied such protection, while US nationals are not. First and foremost, those nationals that base their alleged trademark rights on a foreign confiscation are not the true owners under US law, and so have no ownership rights to assert under TRIPS.
4.120.
The United States argues that neither Section 211(a)(2) nor Section 211(b) accords less favorable treatment to non-US nationals than it does to US nationals. Section 211(b) specifies that US courts shall not recognize, enforce, or otherwise validate any assertion of rights – by virtue of a foreign registration – in trademarks, trade names or commercial names used in connection with confiscated assets "by a designated national or its successor-in-interest". Section 211(b) applies, therefore, by its own terms, to designated nationals and to any successor in interest, whether Cuban or not. It applies to any person, whether Cuban or not and whether US or not, who claims a registration under US law by virtue of a foreign registration of a trademark used in connection with confiscated assets.35
4.121.
The United States submits that Section 211(a)(2) provides that US courts may not recognize, enforce, or otherwise validate any assertion of alleged rights in a confiscated trademark "by a designated national" or a national of any foreign country who is a successor in interest to a designated national. US nationals who are successors in interest are not specifically mentioned in Section 211(a)(2),36 but US nationals cannot even become successors in interest to a designated national ‑ for instance, a Cuban entity that owns a confiscated business in Cuba ‑ without getting a specific licence from OFAC. This is because any transaction by which a US person could become a successor-in-interest to a Cuban confiscating entity is prohibited under 31 CFR 515,201. OFAC has never issued a specific licence for such a purpose.
4.122.
The United States adds that, even assuming for the sake of argument that a US national were in a position to assert alleged rights in trademarks used in connection with assets confiscated abroad, that US person would, moreover, have to convince a US court that any such rights should be enforced in spite of the principle of non-recognition of foreign confiscatory measures. US judicial precedents have very specifically addressed situations involving a foreign confiscation without compensation that purports to affect trademarks or other property in the United States, and resulting disputes between the confiscating entity (or its successor) and the original owners. In those situations, which are equally addressed by Section 211, the precedent is clear and directly on point that it is the original owners of the asset in the United States (whose assets abroad were confiscated) that can assert ownership rights in the associated US trademark, not the confiscating entity or its successors.
4.123.
In sum, the United States asserts that neither Section 211(a)(2) nor Section 211(b) gives non-US nationals less favorable treatment than US nationals.
4.124.
Commenting on the European Communities' argument that Section (a)(1) operates a violation of the national treatment principle at two levels, the United States contends that Section 211 has to be read as a whole, and not split into small "national treatment/MFN" pieces. The United States submits that if Section 211 were limited to Cuba and Cuban nationals, this might be a different case, but it adds that Section 211 is not limited in such a way. Section 211 is directed at Cuba and Cuban nationals who trace their ownership claim to a confiscation and at any other nationals ‑ Cuban or not, US or not ‑ who trace their ownership claim to that confiscation. One cannot assess consistency with national and MFN treatment by focusing on only one part of the law. The law has to be considered as a whole.
4.125.
In the view of the United States, in assessing whether Section 211 on its face, and not as applied, breaches the national treatment provisions of TRIPS, the Panel should examine whether Section 211 requires that US nationals be treated more favorably than non-US nationals. Although Section 211(a)(2) itself is directed at confiscating entities and "foreign" successors in interest, the omission of US successors-in-interest is without practical effect. Under OFAC regulations, US nationals are generally prohibited from becoming successors in interest to a confiscating entity. So the issue of whether, as a successor in interest, US nationals can assert ownership rights in confiscated trademarks under Section 211(a)(2) is academic. The issue would not even arise unless OFAC made an exception to the general prohibition and decided to grant a specific licence to allow a US national to become a successor in interest in the first place.
4.126.
The United States submits that there is no reason to believe that OFAC would ever issue such a licence, and the Panel should not, as a matter of law, assume that OFAC, an executive branch office, would take an action that might put the United States in violation of its international obligations. A law is only WTO-inconsistent on its face if it mandates WTO-inconsistent actions. If the law permits the national authority to act in a manner consistent with the WTO Agreement, panels should not assume that a Member will use its discretion to act in a manner contrary to its international obligations.
4.127.
According to the United States, panels have, on numerous occasions, recognized this distinction between laws that mandate WTO-inconsistent action and those that do not. In United States - Tobacco,37 the panel found that a law did not mandate GATT-inconsistent action, and was therefore not GATT-inconsistent, where the language of that law was susceptible of a range of meanings, including ones permitting GATT-consistent action. In United States - Taxes on Petroleum and Certain Imported Substances,38 the US Superfund Act explicitly directed the US tax authorities to impose a penalty tax on imports that was inconsistent with national treatment, but permitted the US Treasury Department to avoid the imposition of the penalty by issuing a regulation. No regulation had been issued at the time of the panel report. Because the US authorities had the "possibility" of avoiding the GATT-inconsistent penalty in that dispute, the panel found that the law itself was not GATT-inconsistent. Indeed, a law that does not mandate WTO-inconsistent action is not, on its face, WTO-inconsistent, even if actions taken under that law are WTO-inconsistent. For example, the panel in EEC - Regulation on Imports of Parts and Components39 found that "the mere existence" of the anti-circumvention provision of the European Communities' antidumping legislation was not inconsistent with the European Communities' GATT obligations, even though the European Communities had taken GATT-inconsistent measures under that provision. The panel based its finding on its conclusion that the anti-circumvention provision "does not mandate the imposition of duties or other measures by the EEC Commission and Council; it merely authorizes the Commission and the Council to take certain actions".
4.128.
The United States submits that, in this case, there is no indication that OFAC would license a US national to become a successor in interest to a confiscating entity. To the contrary, OFAC regulations generally prohibit such a transaction. Further, even if a US national were in the position of claiming trademark ownership rights derived from a foreign confiscation in a US court, the US principle against the extraterritorial application of foreign confiscations would be applied to such a claim. In short, there is nothing to suggest that, because of Section 211(a)(2), the United States is according more favorable treatment to US nationals than to other nationals. Section 211(a)(2), therefore, does not violate the TRIPS national treatment provisions.
4.129.
According to the United States, the European Communities seems to believe it has proved something of relevance when it cites three US trademarks of apparent Cuban origin that are registered by US companies. The United States contends that there is no reason to believe that those registrants are successors in interest to any confiscating entity and, therefore, the European Communities' observation simply has no relevance to this dispute. Furthermore, the United States claims that it is not clear what point the European Communities seeks to prove by naming several so‑called "Cuban origin" trademarks owned by US companies. If the point is that the ownership of US registrants cannot be challenged, and that the ownership of foreign registrants can be, then this point is wrong. The ownership of US nationals in trademarks can be challenged on the same basis as the ownership of any other nationals. If the European Communities' point was that Section 211 would have prevented such registrations by non-US nationals, but permits registrations by US nationals, this point is also incorrect. Section 211 focuses on the trademark ownership claims of those who, in the first instance, derive their ownership from a confiscation. Others are unaffected by Section 211. Section 211 does not prevent registration or ownership of "Cuban-origin" trademarks; it targets only assertions of ownership by confiscating entities or their successors, of whatever nationality, whether US or not, or whether Cuban or not.
4.130.
The United States argues that the TRIPS and Paris Convention provisions cited by the European Communities ‑ those related to national treatment and most-favoured-nation treatment – require that nationals of Members be treated no less favorably than one's own nationals, and that any advantage, favor, privilege or immunity granted to the nationals of any country be accorded to nationals of all Members. Sections 211(a)(2) and (b) are not inconsistent with either of these principles. Those Sections apply to any person, regardless of nationality that attempts to assert ownership rights in a trademark, trade name or commercial name that are derived from a confiscation in Cuba. The United States adds that courts would also apply the principle of non-recognition of foreign confiscations to any confiscations outside of Cuba.
4.131.
The United States concludes that nothing in Section 211 requires that the United States take any action that is inconsistent with any TRIPS obligation.

(f) Section 211(a)(2) of the OAA in relation to Article 4 of the TRIPS Agreement

4.132.
The European Communities argues that the dichotomy created by Section 211(a)(2) distinguishes between Cuba or Cuban nationals and others, the latter being US nationals or nationals of any other country. Therefore, this provision does not only discriminate between Cuban nationals and US nationals (violation of national treatment obligation) but also creates de jure discrimination between Cuba/Cuban nationals and other non-US nationals by denying protection of intellectual property rights held by Cuban nationals while granting such protection to nationals of other countries. It would appear obvious that none of the exceptions under sub-paragraphs (a) to (d) of Article 4 of the TRIPS Agreement on "Most-favoured-nation treatment" are relevant for the case at hand. Therefore, Section 211(a)(2) is at variance with the United States' obligations under Article 4 of the TRIPS Agreement.
4.133.
The United States contends that it is simply incorrect to assert that Sections 211(a)(2) and (b) violate the TRIPS most-favoured-nation provision – Article 4 – because they "create[ ] de jure discrimination between Cuba/Cuban nationals and other non-US nationals by denying protection of intellectual property rights held by Cuban nationals while granting such protection to nationals of other countries". It is incorrect first because, under US law, persons basing their trademark claims on foreign confiscations are not the true owners of the trademarks and therefore have no rights to assert under TRIPS. It is also incorrect because Sections 211(a)(2) and (b) do not grant an "advantage, favour, privilege, or immunity" to non-Cuban nationals that they do not grant to Cuban nationals: neither one nor the other can enforce a trademark based on a foreign confiscation.
4.134.
The United States submits that Sections 211(a)(2) and (b) apply in the first instance to those entities in Cuba that confiscated a business in Cuba without compensation and to any Cuban national, to whom the "rights" in connection with that business are transferred or made available.40 These persons may not assert ownership rights in a US trademark, trade name, or commercial name used in connection with that confiscated business under Sections 211(a)(2) and (b). In other words, there must be a clean "chain of title" in order to assert ownership rights.41 Sections 211(a)(2) and (b), therefore, are aimed at all those persons whose claim to a particular trademark, trade name or commercial name is based on an uncompensated confiscation of the business associated with that trademark, trade name or commercial name. That nationals of Cuba are specifically mentioned in Sections 211(a)(2) and (b) results from the territorial nature of trademarks: Cuban nationals who assert trademark rights used in connection with confiscated businesses in Cuba – unlike other nationals ‑ are claiming a right by virtue of the confiscation. Further, the principle that the United States will not give extra-territorial effect to foreign confiscations is a principle that applies equally to all countries, and is not limited to confiscations in Cuba.
4.135.
According to the United States, the TRIPS Agreement assures that, with respect to the protection of intellectual property, nationals of different Members are not granted different advantages, favours, privileges or immunities based purely on their nationality. It does not, however, prevent a Member from pursuing legitimate objectives ‑ such as not recognizing rights in trademarks similar to those used in connection with a confiscated business in Cuba ‑ as long as the advantages granted to the nationals of one Member are not withheld from the nationals of another Member. That Sections 211(a)(2) and (b) are focused on trademarks similar to those used in connection with confiscated businesses in Cuba ‑ and not confiscated businesses elsewhere ‑ does not amount to an MFN violation under the TRIPS Agreement, because it does not discriminate against Cuban nationals, as opposed to other nationals, who wish to assert such trademark rights.42
4.136.
The United States adds that Sections 211(a)(2) and (b) do not limit their focus to Cuba and Cuban nationals: under those Sections, US courts will not enforce or recognize any asserted rights to such trademarks, trade names and commercial names by any successors-in-interest ‑ whether Cuban or not ‑ to any Cuban entities claiming rights based on confiscated assets. It does not matter if the "rights" associated with the confiscated assets are transferred by the confiscating entity to a Cuban, European, or US national: US courts will not recognize those assertions of rights as regards trademarks, trade names and commercial names in the United States. Sections 211(a)(2) and (b) do not, therefore, grant an "advantage, favour, privilege or immunity" to the nationals of, for instance, France that it does not grant to the nationals of Cuba with regard to the protection of intellectual property rights. Under Sections 211(a)(2) and (b), a Cuban national who is a successor-in-interest to a confiscated business will have all the advantages of a French national who is a successor-in-interest to a confiscated business, with regard to the protection of intellectual property rights. Neither one will be able to claim rights in the United States to a trademark, trade name, or commercial name of a confiscated business.
4.137.
The United States submits that, consequently, Sections 211(a)(2) and 211(b) are not inconsistent with Article 4 of the TRIPS Agreement.
4.138.
The European Communities argues that Articles 3 and 4 also apply to common-law trademarks. Therefore, the curtailments operated by Sections 211(a)(2) and (b) to US common law trademarks are also relevant for the case.
4.139.
In this situation there can, in the view of the European Communities, be no reasonable doubt that Sections 211(a)(2) and (b) are at variance with the US obligations under Article 3 of the TRIPS Agreement and Article 2.1 of the TRIPS Agreement together with Article 2(1) of the Paris Convention as well as Article 4 of the TRIPS Agreement.
4.140.
The European Communities argues that this conclusion would be valid even if one were to qualify Section 211 as a measure to address the issue of foreign expropriations. Given that such a measure would undoubtedly affect the "acquisition, maintenance, enforcement and use" of intellectual property rights covered by TRIPS, such measures have to comply with Articles 3 and 4 of the TRIPS Agreement, even if one were to argue that they are exempt from the specific obligations under Part II thereof.
4.141.
The Panel asked whether, in the view of the European Communities, Article 4 of the TRIPS Agreement allows a Member to have a certain policy applicable to confiscations of trademarks in one Member, on the condition that all WTO Member nationals are treated similarly in respect of such confiscations in that Member, or whether that Article requires that a similar policy has to be applied to confiscations of trademarks in all other Members. The European Communities responds that in its view the MFN obligations flowing from Article 4 of the TRIPS Agreement attach to persons, not to situations. It argues that Article 4 outlaws discrimination between nationals of other WTO Members (discrimination as between own nationals and nationals of other WTO Members are outlawed by Article 3 of the Agreement). Therefore, Article 4 requires that all nationals of other WTO Members are treated similarly in respect of a certain event. Article 4 does not require that similar events in all other WTO Members are dealt with in a similar way, as long as this does in reality not create a discrimination between persons. Thus, extending the scope of Section 211 to "all expropriations everywhere in the world at all times" would not do away with the violation of Article 4 of the TRIPS Agreement.
4.142.
In response to a similar question, the United States argues that because of the context of this dispute – involving the particular case of foreign confiscations, and the principle that Members are not required to give effect to foreign confiscations with respect to assets, including trademarks, in their territory – Section 211 is consistent with most-favoured-nation treatment obligations under either interpretation. Section 211 treats all nationals the same with respect to the ownership of trademarks associated with assets confiscated in Cuba, and the principle of non-recognition of foreign confiscations applies equally to all countries. The United States understands that the European Communities' claim that Section 211 violates the most-favoured-nation treatment obligation relates only to the first situation described in the Panel's question, i.e., that Section 211 violates TRIPS because, with respect to the confiscations at issue in Section 211, it gives advantages to one Member's nationals that are not granted to other Members' nationals. This is the argument to which the United States believes it has responded in stating that Section 211 provides identical treatment to all nationals. Because of this identical treatment, there is no MFN violation. Because the European Communities is only alleging an MFN violation based on the first situation described by the Panel, the United States argues that the Panel need not reach the question of whether TRIPS Article 4 applies in the second situation. The United States adds that it is also true, because of the special circumstance of foreign confiscations and their effect on assets within a Member's territory, that the principle reflected in Section 211 is a principle that applies in the United States regardless of the location of the confiscation.

3. Section 211(b) of the OAA

4.143.
The European Communities argues that while the coverage of Section 211(b) appears to "parallel" the coverage of Section 211(a)(2), its precise scope is largely obscure. The absence of any legislative history in relation to Section 211 adds to this obscurity. By way of speculation one might think that the drafters intended to cover rights flowing from treaties which are self-executory in the US legal system, i.e., where no act of Congress beyond ratification is needed. However, in the only case which has so far been decided by US Courts in relation to Section 211(b), the US District Court, with the subsequent approval of the Court of Appeals, has given Section 211(b) a wide scope43.
4.144.
From the foregoing, the European Communities concludes that the obligations flowing from the TRIPS Agreement ‑ or put in the language of Section 211(b), the assertion of rights flowing from TRIPS ‑ fall under Section 211(b).
4.145.
The European Communities argues that it is noteworthy that the WTO Agreement (including the TRIPS Agreement) is not self-executing in the US legal order. This means that an individual cannot rely on TRIPS in a US Court but can only rely on the terms of the US implementing legislation.
4.146.
The European Communities states that, given that Section 211(b) denies to "a designated national or its successor-in-interest" access to US courts for the recognition, enforcement or other validation for a trademark, trade name or commercial name, the same arguments as it used under Section 211(a)(2) apply – mutatis mutandis – to Section 211(b) as well.
4.147.
The European Communities claims that, by denying any judicial enforceability of the targeted rights, Section 211(b) is at variance with Article 16.1 of the TRIPS Agreement for the reasons pointed out in its arguments made in respect of Section 211(a)(2). It also claims that Section 211(b) is at variance with the US obligations flowing from the first sentence of Article 42 of the TRIPS Agreement as it explained in respect of Article 211(a)(2).
4.148.
Furthermore, the European Communities claims that Section 211(b) violates the US obligations under Article 2.1 of the TRIPS Agreement together with Articles 6bis (1) and 8 of the Paris Convention (1967) as set out under its arguments concerning Section 211(a)(2). Section 211(b) also violates the national treatment obligations of the United States as contained in Article 3.1 of the TRIPS Agreement and Article 2.1 of the TRIPS Agreement together with Article 2(1) of the Paris Convention (1967) for the reasons the European Communities points out in its arguments concerning Section 211(a)(2). Finally, the European Communities claims that Section 211(b) is incompatible with the United States' obligations under Article 4 of the TRIPS Agreement for the reasons it mentioned in its arguments concerning Section 211(a)(2).44
4.149.
The United States presented its arguments concerning both Section 211(a)(2) and Section 211(b) at the same time in its written submissions and oral statements. Its arguments concerning both provisions are contained above in those sections of this part of the report that summarize the parties' arguments in relation to Section 211(a)(2). In addition, the United States made the following remarks that concern specifically Section 211(b) in relation to the national treatment obligation.
4.150.
The United States argues that US nationals may fall under Section 211(b) as successors to foreign trademark registrants. Section 211(b) specifically applies, by its own terms, to all successors in interest – whether US or not. Therefore, Section 211(b) does not violate national treatment obligations. In response to a question from the Panel, the United States emphasizes that Section 211(b) applies equally, without exception, to any national who asserts ownership rights derived from the subject confiscations, and so does not violate the national treatment obligation. Section 211(b) is addressed to designated nationals or their successors in interest (of whatever nationality) that base their US trademark registration application on a "home country" foreign registration. Such a trademark application benefits from certain advantages that are not available to those who do not file based on a home country registration. For instance, applications based on a home country registration do not require proof of actual use. "Designated nationals" may take advantage of the "home country" registration process, whereas US nationals may not. Therefore, to the extent that Section 211(b) might prevent a designated national from asserting purported ownership rights in a trademark that was registered based on a home country registration, the statute simply puts the designated national on an equal footing with US nationals, who have no access to that form of registration. As regards "successors in interest", all such successors are in the same position, regardless of nationality. If a US national could become a successor in interest ‑ an assumption which according to the United States is doubtful45 ‑ he or she would be treated no better than successors in interest who are not US nationals. These factual situations show that, under Section 211(b), US nationals are treated no better than, and sometimes worse than, designated nationals.

D. HORIZONTAL ISSUES

1. Principle of non-recognition of foreign confiscations

4.151.
Before responding to the specific claims made by the European Communities in its first written submission, the United States, in its first written submission, takes up an issue to which it refers as the principle of non-recognition of foreign confiscations. It argues that it is an established rule of customary international law that a State may not expropriate private assets of nationals of other States in its territory unless the expropriation is (1) for a public purpose, (2) on a non-discriminatory basis and in accordance with due process of law, and (3) subject to prompt, adequate and effective compensation. In numerous judicial decisions spanning the past century, courts throughout the world have found similarly under their laws that foreign confiscatory decrees should be denied recognition in the forum States because they are repugnant to the nation's basic principles with respect to private property rights.46 Those courts have found in the constitution and laws of the forum State emphatic pronouncements protecting property rights from uncompensated expropriation, and have had no difficulty concluding that those legal prescriptions are among the most fundamental principles of their systems. The courts have overwhelmingly held, accordingly, that it would be a flagrant violation of these principles if a foreign confiscation were given effect in the territory of the forum State.
4.152.
According to the United States, this is as true in Europe as it is in the United States. One illustration of the European jurisprudence given by the United States is the multi-country litigation that arose out of the confiscation of the Koh-I-Noor trademark by the Communist revolutionary Government in Czechoslovakia.47 Consistent with this practice in Europe, courts in the United States have steadfastly held that foreign confiscations will not be given effect within its jurisdiction. In case after case, courts in the United States have ruled that a foreign confiscation "is 'shocking to our sense of justice', and we need not enforce it here".
4.153.
The United States argues that the unifying theme of the court decisions by European and US as well as other courts it has cited is that a foreign confiscation is contrary to the basic principles of the forum and will not be given effect in it. This principle – the principle of non-recognition of foreign confiscations – has been applied in a variety of settings. Not surprisingly, the most frequent case brought before the national courts is that of a foreign confiscation giving rise to a claim of title to property located in the forum. When the forum courts are called upon to adjudicate such a dispute, they routinely refuse to recognize the purported extraterritorial effects of the confiscation. Courts have also refused to recognize claims of title, based on a foreign confiscation, to property located in a third country at the time of the confiscation. In particular, courts have refused to give effect to the purported extraterritorial reach of a foreign confiscatory decree to trademarks registered in Berne.
4.154.
The United States submits that Section 211 was enacted to reaffirm this principle with respect to trademarks, trade names and commercial names used in connection with businesses confiscated by Cuba, and to reaffirm and clarify the rights of the legitimate owners of such marks and names. Section 211(a)(1) provides that, absent consent of the original owner, a general licence from OFAC is unavailable for the registration or renewal of any trademark that is the same as or substantially similar to one used in connection with a business confiscated by Cuba.48
4.155.
The United States submits that, as a complement to Section 211(a)(1), Section 211(a)(2) prevents the confiscating government and its successors in interest from asserting rights of ownership in trademarks used in connection with confiscated assets in US courts. Section 211(b) is a provision parallel to Section 211(a)(2). Whereas Section 211(a)(2) protects the rights of legitimate owners vis-à-vis designated nationals or their successors who would attempt to claim confiscation-derived trademark rights under common law or a registration, Section 211(b) extends this prohibition to designated nationals or their successors that base their US trademark registration on foreign registrations, through domestic laws intended to implement treaties. Section 211(b) prohibits the enforcement in the United States of rights based on foreign registrations in the case of a trademark, trade name, or commercial name confiscated by Cuba, except with the consent of the original owner.49
4.156.
The European Communities contends that Section 211 has nothing to do with the well established US law and practice in relation to the domestic effects of foreign expropriations. Section 211 concerns exclusively the treatment of US trademarks and trade names against which the Cuban expropriations can have had no effects, and therefore the customary international law principles on expropriations raised by the United States to defend Section 211 are simply not relevant for the purposes of resolving this dispute.50
4.157.
The European Communities asserts that, under public international law, the main principle to be recalled with regard to "ownership" is that, as a consequence of the principle of sovereign equality of States, every State has the right to regulate the ownership of property in its own territory. This right includes the right to regulate how to acquire, enjoy, enforce and transfer property. It also includes the right to establish under which conditions the State may compulsorily take private property, in other words, nationalise, confiscate or expropriate it. A corollary of this principle is that a State is not required to accept another State's expropriation of property on the first State's territory.
4.158.
In light of this principle, the European Communities states that it has never challenged that the United States is entitled not to recognise Cuban expropriations as changing the ownership of US trademarks and trade names.
4.159.
However, the European Communities argues that, in light of the principle of sovereign equality of States, the United States is not entitled to refuse to recognise a change in ownership in an expropriating State of property that is incontestably under the jurisdiction of the expropriating State (business assets in Cuba) and to draw certain consequences therefrom.
4.160.
In response to a question from the Panel, the European Communities states that the TRIPS Agreement does not require a WTO Member to recognize a confiscation of intellectual property in another country as regards the legal effect of that confiscation on the ownership of intellectual property protected in its own territory, in a third country, or even in the country where the confiscation took place.
4.161.
In response to other questions from the Panel, the European Communities notes that, if a case with a factual situation similar to that of the Koh-I-Noor case, to which the United States had referred, would now arise in some EC member States' courts, the TRIPS Agreement would not require the courts to come to different conclusions. However, under the TRIPS Agreement a WTO Member remains also free to recognise ownership rights in the hands of the confiscation beneficiary.
4.162.
In response to a further question, the European Communities clarified that in its view the TRIPS Agreement would not mandate different outcomes as regards the decisions, cited by the United States, where courts had refused to recognize claims of title, based on a foreign confiscation, to property located in a third country.
4.163.
As regards protection of well-known marks under Article 6bis of the Paris Convention (1967) as incorporated into the TRIPS Agreement, the European Communities argues, in response to a question from the Panel, that in case an enterprise in country A which owned the well-known trademark in country B, is expropriated in country A, country B – on the basis of TRIPS – is free to recognize the original owner or the post-expropriation owner as the owner of the well-known trademark in its territory.
4.164.
As regards Article 6quinquies of the Paris Convention (1967) as incorporated into the TRIPS Agreement, the European Communities argues, in response to another question, that it can see no provision in that Article which would forbid a Member, where an application covered by the provisions of Article 6quinquies is filed, to accept a certificate that was issued before the confiscation, because a WTO Member can renounce on the production of a certificate altogether.
4.165.
Responding to the same question, the European Communities takes the view that under Article 6quinquies the country where registration is sought, is obliged to recognise the post-expropriation situation in the expropriating country and give full effects to an application based on this new situation. It adds that, in its view, the country where registration is sought has under this provision no right to question the existence of a trademark in the hands of an owner as defined by the laws of the country of origin.
4.166.
The European Communities also explains, in response to a question from the Panel, that in its view Article 6quinquies D of the Paris Convention does not create a link between trademark ownership in the country of origin and the country where the benefit of Article 6quinquies is claimed. This provision only requires that the trademark exists in the country of origin, it does not require that the applicant is identical with the owner of the trademark in the country of origin.
4.167.
Commenting on Section 211, the European Communities submits that confiscations of assets have frequently happened throughout the 20th century. It says that if it is true that the purpose of Section 211 is to deny recognition to these confiscations in the United States, it comes as a surprise to the European Communities that the United States has waited until 1998 to adopt for the first time legislation to pursue this objective. Similarly, the European Communities is surprised that it has taken the United States almost four decades to address problems caused by the situation flowing from confiscations in Cuba that mainly occurred around 1960. It also appears curious to the European Communities that numerous countries have operated uncompensated confiscations both before and after the Cuban revolution, but in relation to these uncompensated confiscations by other countries no provisions like Section 211 exist or have ever existed under US law.
4.168.
The European Communities also argues that no other country in the world has a provision like Section 211 on its statute books, or at least no such statutory or regulatory provision has ever been communicated to the TRIPS Council under Article 63 of the TRIPS Agreement.
4.169.
The European Communities also claims to be surprised to realise that Section 211 only applies to trademarks and trade and commercial names, but not to other intellectual property rights, given that, according to the United States, it is an application of the general principle of US law to deny effects to foreign uncompensated confiscations. Furthermore, no other intangible rights (such as, for example, receivables or bank accounts) or tangible assets are affected by Section 211 and no other equivalent provision under US law covering such assets would appear to exist or have ever existed.
4.170.
In the view of the European Communities, the language of Section 211 is sufficiently straightforward to reasonably allow an appreciation of its scope and operation. In line with established rules on the issue of burden of proof, as expressed by the Appellate Body in India – Patent Protection51, the burden to prove that Section 211 may mean something else than its plain text is squarely on the United States.
4.171.
The European Communities claims that the United States in several instances deliberately mixes up the question of ownership of trademarks/trade names in Cuba and issues of ownership to trademarks/trade names in the United States. It argues that a good example of this kind of confusion can be found in the reply to question 21 from the Panel52 where the United States states that "added to this was the fact that, because Cuban trademarks cannot be used in the United States, there was no opportunity for the original owners to bring suit for infringement with respect to the confiscated mark". Given the principle of territoriality of trademarks,53 a Cuban trademark can under no circumstance be used against an infringement in the United States.
4.172.
The European Communities notes the US assertion in that reply that "[f]or these reasons Section 211 did not meaningfully change the legal situation with respect to those trademarks covered by its provisions compared to the situation under the pre-existing law". In this respect, the European Communities refers to certain parts of its introductory remarks54, and to the Havana Club trademark which, before Section 211 entered into force, was duly registered and renewed by the USPTO. The European Communities claims that these acts can no more be performed since Section 211 entered into force.
4.173.
European Communities argues that the US jurisprudence cited by the United States carefully limits its considerations to the precise assets which were confiscated or were at least the target of the attempted confiscation. On the contrary, Section 211 extends its scope well beyond confiscated assets.
4.174.
As to the targeted US trademarks and trade names under Section 211, the European Communities argues that any US trademark or trade name is a potential target, if the sign or combination of signs of which it is composed is the same or substantially similar to a trademark or trade name used in connection with a business or assets that were confiscated in Cuba. It is important to appreciate that this identity or similarity relates to the perception of the signs of which the trademark/trade name is composed. There is no need that the Cuban business effectively owned such a US trademark/trade name. According to the European Communities, the United States has confirmed that Section 211 applies in a situation in which no identical or similar trademark existed in the United States (in the hands of the expropriated business or in the hands of another person) at the time of the Cuban expropriations.55 The European Communities argues that the US trademark/trade name does not have to have any factual or legal link with a trademark/trade name which existed in the United States at the moment of the Cuban confiscation.
4.175.
The European Communities submits that the trademark asset consists in exclusive rights relating to a sign in conjunction with a certain class of products. Section 211 does not only affect a US trademark in relation to the products which were covered by the trademark used in relation to the confiscated enterprise, but covers trademarks for any class of products. Also, Section 211 does not limit its scope to the same trademarks which were the object of the confiscation, but extends its scope to trademarks which are substantially similar to the ones used by the confiscated enterprise. The European Communities claims that it is obvious that a substantially similar trademark by its very definition has never been confiscated or attempted to be confiscated.
4.176.
The European Communities further argues that trademarks can be abandoned by the respective owners through non-use and an intent to abandon. In this situation, the trademark falls into the public domain and anybody can apply for its registration and acquire ownership to it. Such abandoned trademarks are clearly covered by Section 211, without them being legally linked to previously confiscated trademarks.
4.177.
The European Communities asserts these examples clearly demonstrate how Section 211 applies to US trademarks which had neither a factual nor a legal link with a Cuban enterprise using such a trademark. By its very broad wording, Section 211 applies to a US trademark which was never the property of the confiscated enterprise, or linked to it in any way. It is sufficient under Section 211 that the US trademark is the same or substantially similar to a trademark used in connection with a business that was confiscated. Section 211 does not require that the trademarks/trade names used with the confiscated Cuban enterprise existed in the United States, they can have existed anywhere in the world.56
4.178.
As to the operation of Sections 211(a)(2) and (b), the European Communities argues that the ownership of a common-law trademark has to be strictly separated from the ownership of a registered federal trademark, and that the United States has been seeking throughout the proceedings before the Panel to mix up these two matters. To this end it reviews some basic features of the US system of trademark protection. According to the European Communities, a distinction has to be made between so-called common law trademarks and registered trademarks. The common law of protection against unfair competition provides for an action to protect unregistered trademarks, service marks, trade names, designs and trade dress through actual use in commerce as long as they meet certain fundamental requirements for protection which may vary from State to State. Such common-law trademarks are typically territorially limited to the federal State or region where they are used. Registered federal trademarks under the Lanham Act are a completely different creature. A registered federal trademark may or may not be based on a pre-existing common law trademark. It is perfectly possible to obtain a registered trademark without having had any common-law trademark previously.
4.179.
According to the European Communities, a US federal registered trademark is created by the act of registration. Before registration, a registered trademark does not exist and consequently there exists no owner of such right. Before such a registration is granted, the USPTO has to verify that the applicant meets all requirements for trademark registration. One of the elements to be verified is the use or intention to use the signs or combination of signs in commerce for the products concerned. This latter criterion and some other criteria can also be invoked by third parties. Once granted, a federal registered trademark becomes "incontestable" after five consecutive years of use and can no more be challenged by any contender who asserts prior rights. A similar effect occurs already after 5 years of registration.
4.180.
The European Communities claims that this mechanism is one of the very reasons for the introduction of Section 211. The "Havana Club" trademark was duly registered in the USPTO in 1976 and had become by 1998, when Section 211 was adopted, incontestable. It is insofar also instructive that the USPTO has refused in 1994 and 1995 requests for the registration of a "Havana Club" trademark made by members of the Arechabala family, the former owners of the expropriated Cuban business which used the "Havana Club" trademark.57
4.181.
As to the question of whether a US national can be the owner of a trade name or trademark targeted by Section 211, the European Communities argues that, given the fact that the trademarks and trade names targeted by Section 211 do not have to be legally traceable to a Cuban owner, the question if OFAC can and has already granted transfer licences is finally irrelevant, even though the text of the CACR is utterly clear that OFAC has the authority to grant such licences. As regards decisions of transfer, OFAC is only concerned with transactions in property in which Cuba or a Cuban national has an interest. It is not at all concerned with transactions in property owned by other persons.
4.182.
The European Communities submits that the United States has repeatedly tried to excuse the TRIPS inconsistencies of Section 211 by referring to the uncertainty of how US courts might interpret this provision. It should be sufficient to recall that US courts are constitutionally required to fully respect federal statutes. In this context it is also noteworthy that the WTO Agreement (including the TRIPS Agreement) is not self-executing in the US legal order. This means that an individual cannot rely on TRIPS in a US court but can only rely on the terms of the US implementing legislation. Furthermore, it is well-established US jurisprudence that subsequent federal statutes have priority over previous international treaties concluded by the United States, thus preventing a US court from interpreting US domestic law in a treaty conform manner in case of conflict. This principle has been applied by a US court in a case referred to earlier58 where the Court found that: "[…] Congress made clear its intention to repeal rights in marks and trade names derived from treaties, where those marks and trade names satisfy the requirements set forth in Section 211."
4.183.
The European Communities argues that, as far as the USPTO is concerned, the clear wording of Section 211(a)(1), as implemented through Section 515,527(2) of the CACR, does not authorise to make payments to the USPTO necessary to file applications with the USPTO with respect to the registration and renewal of trademarks covered by Section 211. USPTO does not have any discretion to act otherwise.
4.184.
The European Communities argues that the United States has put forward as its main defence the existence of a longstanding US policy against the recognition of foreign expropriations. The European Communities says that Section 211, which is allegedly a particular incarnation of this "longstanding policy", is in the view of the United States therefore exempted from TRIPS scrutiny. The European Communities argues that there exists nowhere in TRIPS a blanket exception that measures taken by a WTO Member would be exempted from TRIPS scrutiny, if the underlying policy considerations for these measures involve issues of foreign confiscations. The European Communities states that the United States has never pinpointed any such TRIPS provisions. According to the European Communities, the acceptance of any such blanket exception, be it for considerations of expropriations or for other reasons (e.g., to further public health or to foster the domestic industrialisation), would render the TRIPS Agreement perfectly meaningless. Therefore, all measures taken by a WTO Member in relation to intellectual property rights covered by TRIPS have to meet the minimum standards of protection provided for by TRIPS. The European Communities argues that there can be no doubt – which according to it is not disputed by the United States – that the intellectual property rights covered by Section 211 are subject to TRIPS disciplines.
4.185.
Commenting on the decisions by US courts to which the United States has referred in order to illustrate the US policy to disregard the effects of uncompensated confiscations by other countries in relation to non-nationals of such countries, the European Communities submits that the clear leitmotiv followed by the courts in these decisions consists in allocating ownership to the US rights as between different contenders. The European Communities argues that Section 211 pursues an approach which is diametrically opposed to the policy reflected in the jurisprudence referred to by the United States. Section 211 has to be systematically seen in the context of the system of US measures vis-à-vis Cuba, of which the Cuban Assets Control Regulation, to which Section 211 refers in several instances, is the pivotal piece of legislation. The purpose and object of these measures, as the name of the regulation already suggests, is not to allocate certain assets as between Cuba or Cuban nationals and others, but to control and curtail the exercise of legally undisputed ownership rights held by Cuba or Cuban nationals in relation to assets situated in the United States. The European Communities claims that the recognition of ownership of Cuba or Cuban nationals under US law in these assets is beyond doubt and a very precondition to the existence of the CACR.
4.186.
The European Communities argues that all three operative parts of Section 211 start out from the basic assumption that the trademarks and trade or commercial names are lawfully owned by Cuba, a Cuban national or their successors-in-interest. Only if these designated nationals or successors-in-interest are considered as the lawful owners of the assets concerned, can they reasonably engage in a transaction in relation to these assets. This argument also applies to Sections 211(a)(2) and (b) because it does not make any sense to forbid US courts to recognize, enforce or otherwise validate the assertion of rights if there are no rights vested in the claimants in the first place.
4.187.
The European Communities argues that another marked difference between Section 211 and the US jurisprudence in relation to foreign confiscations consists of the fact that this jurisprudence allocates the assets between two or more contenders. The European Communities claims that Section 211 operates whether or not there exists a contender. But even in cases where there exists a contender Section 211 will under no circumstances operate to allocate ownership rights. In other words, on the basis of Section 211(a)(2) and (b), the "original owner" will under no circumstances become the owner of the trademarks/trade/commercial names concerned. Thus the "original owner" will not be able himself to ask for injunctive relief or damages if somebody uses the disputed trademark or trade name without his consent. Sections 211(a)(2) and (b) will only grant the "original owner" a negative right to prevent somebody else from enforcing certain rights.
4.188.
The European Communities argues that the owner of the confiscated business himself is given under Section 211 no cause of action or defence at all. He is not even a party ‑ neither necessary nor permissible ‑ to litigation involving the application of Section 211. Any infringer of a registered trademark can invoke Sections 211(a)(2) and (b) in an infringement procedure brought by the owner of the registered trademark. The infringer does not need to have the consent or authorisation by the owner of the confiscated business to invoke this defence. The confiscated business may have ceased to exist altogether or the owner may have died without successors or simply disappeared.
4.189.
The European Communities claims that the punitive character of the operation of Section 211 is clearly demonstrated. This provision is exclusively concerned with the discriminatory curtailment of trademarks and trade names in the hands of certain right holders, without giving any corresponding right to the owner of the business allegedly aggrieved by the foreign confiscation.
4.190.
The European Communities argues that these operational features distinguish Section 211 in a fundamental way from the US jurisprudence on foreign expropriations which is concerned with the allocation of ownership as between several contenders. As the United States has rightly pointed out, US law and practice does indeed generally recognize the assets concerned in the hands of the pre-confiscation owner rather than in the hands of the beneficiary of the confiscation. To the contrary, Section 211 is only concerned with curtailing the use of an asset by its legal owner, without giving any corresponding benefit to the "original" owner.
4.191.
The European Communities argues that the jurisprudence cited by the United States of both US and foreign courts that denies effects to foreign expropriations vis-à-vis domestic assets has nothing to do with Section 211. If, indeed, a US trademark or trade name was the object of a Cuban expropriation, this expropriation would – in light of the jurisprudence referred to by the United States – in all likelihood not be recognised and the pre-confiscation owner would continue to be the owner of the US rights. In this situation, Section 211 clearly has no role to play. The operation of Section 211 is diametrically opposed to the one described in this expropriation jurisprudence. It creates, in fact, detrimental effects for US assets based on events, which have taken place in Cuba in relation to assets outside the US. This could be described as a reversal of the principal of territoriality.
4.192.
The European Communities further argues that the expropriation jurisprudence focuses on the asset and allocates the asset to persons independently of their respective nationality. To the contrary, Section 211 curtails trademarks and trade names only in the hands of certain nationals but not in the hands of others.
4.193.
The European Communities submits that all this demonstrates beyond any reasonable doubt that Section 211 has nothing to do with the denial of recognition of domestic effects flowing from foreign expropriations, i.e., with the application of the principle of territoriality. Section 211 is exclusively concerned with the curtailment of the enjoyment of US trademarks and trade names in the hands of "undesirable" owners. Section 211 in reality has created yet another set of punitive measures targeted at Cuba and Cuban nationals and their successors-in-interest.
4.194.
The European Communities recalls the US argument that no actual cases have occurred in which Section 211 has been applied and claims that, therefore, Section 211 cannot be considered contrary to any TRIPS obligation at this point in time. The European Communities submits that there exists a final judgement by the US Federal Court of Appeals for the Second Circuit in the Havana Club case in which Section 211(b) was applied. The European Communities adds that Section 211 contains clear and unequivocal instructions to the US executive and judicial branch of government without granting any degree of discretion. It argues that it is a well-established principle of WTO jurisprudence that national laws and regulations can be subject to scrutiny without having been effectively applied in individual cases and without the need for the complaining Member to have been directly affected by their operation.59
4.195.
The Panel requested the United States to clarify which trademarks and other signs were covered by Section 211. In response, the United States submits, inter alia, that, in general terms, Section 211 addresses the issue of trademarks, trade names, and commercial names associated with business assets confiscated without compensation under circumstances where the "original owner" of the confiscated business has not provided a consent in respect of actions taken in relation to them. Therefore, a finder of fact such as a US court would have to determine whether each of the elements of Section 211 was met.
4.196.
As regards the term "such a confiscated mark" used in Section 211(a)(2), the United States submits that the term serves two purposes. First, it is a short-hand way of referring to a trademark described in Section 211(a)(1), that is, "a mark, trade name or commercial name that is the same as or substantially similar to a mark, trade name or commercial name that was used in connection with a business or assets that were confiscated unless the original owner […] has expressly consented". Second, the language "such confiscated mark" reflects that there is, under Section 211, a connection or link between the trademark whose enforcement is sought and the confiscation. Trademarks do not exist in a vacuum, but are linked to an underlying business asset. In situations covered by Section 211, that underlying business asset has been confiscated, the confiscating entity (or its successor in interest) is asserting ownership of the associated trademark by virtue of the confiscation of the asset, and there is a prior owner of the trademark used in connection with that asset. In this sense, it is the mark itself that has been confiscated. According to the United States, it appears that the Cuban confiscations did extend to the trademarks used in connection with the confiscated businesses, along with all the other assets of those businesses.
4.197.
In response to a question whether Section 211 would apply to a trademark whose original owner has legally abandoned the trademark in the United States, the United States submits that this is a question that is left to the decision-maker. The United States argues that the core issue under Section 211 is trademark ownership. Therefore, a court could well decide that, under particular circumstances where a trademark has been legally abandoned, there is no original owner whose consent is required under Section 211.60
4.198.
According to the United States, the European Communities professes to embrace the recognized principle that Members do not have to give effect to foreign confiscatory decrees with respect to assets in their territory, but argues that its position in this dispute is unrelated to that principle. The United States argues that the principle depends, however, on Members being free under the TRIPS Agreement to determine the conditions under which a person can claim ownership in a trademark. If a Member is not free under the TRIPS Agreement to determine these substantive rules of ownership, as the European Communities contends, then a Member is not free to decide that it will not recognize the ownership of confiscating entities in trademarks; the European Communities cannot have it both ways.61
4.199.
In the view of the United States, the European Communities takes a very expansive view of the requirements of Article 6quinquies of the Paris Convention. The United States argues that, where confiscated trademarks registered in Cuba are concerned, the European Communities is, in fact, demanding that the United States give effect to confiscations with respect to assets within the United States. This is precisely what the many cases cited by the United States have refused to do, and what Section 211 addresses. The European Communities cannot avoid this contradiction between its position on Article 6quinquies (as well as on TRIPS Articles 15.1 and 16.1) and the principle of non-recognition of foreign confiscations, which the European Communities expressly accepts.
4.200.
The United States claims that the European Communities, in its responses to questions from the Panel,62 tries to navigate a course through the circumstances in which TRIPS does require a Member to confer trademark ownership on the entity that confiscated it, and those in which it does not. The United States argues that the European Communities does this with a view to preserve both its present position in this dispute that TRIPS dictates trademark ownership rules, on the one hand, and the principle that Members have the right not to recognize the ownership rights of confiscating entities, on the other. The United States argues that this is a distinction that cannot be maintained; either TRIPS does or it does not contain rules that require the United States to recognize a confiscating entity's ownership in a US trademark. According to the United States, the TRIPS Agreement does not contain such requirement; to say that there is such a TRIPS requirement, but that it is subject to exceptions, is not only to invent an "ownership" provision where there is none, but to craft detailed exemptions to that invented provision to accommodate the recognized principle of non-recognition.
4.201.
The United States submits that the European Communities attempts to confuse the issue by arguing that Section 211 impermissibly extends the reach of the accepted principle of non-recognition of foreign confiscations. The United States recalls that the European Communities', in response to questions from the Panel63, argues that the United States, through Section 211, denies the ability of a sovereign, such as Cuba, to make ownership decisions within its own territory. According to the United States, the European Communities would have the Panel believe that Section 211 is the United States' attempt to control creation and assignment of trademark, trade name and/or commercial name rights in other countries. The US submits that, in fact, Section 211 merely denies the extraterritorial effect of an uncompensated confiscation. Section 211 in no way addresses the validity, in a third country, of a particular trademark, trade name or business name. It simply points out that, despite validity in any other country, an assertion of rights in a trademark, trade name or business name associated with a business that was confiscated without compensation is not a valid assertion of rights in the United States – unless such assertion is made by the owner.64
4.202.
The United States argues that the European Communities itself appears unsure about its argument that its interpretation of TRIPS has no relevance to the principle of non-recognition of foreign confiscations. The United States refers to a question the Panel posed to the European Communities on whether the Koh-I-Noor cases cited by the United States would have come out differently under the European Communities' interpretation of TRIPS, to which the European Communities replied, without elaboration, that it is "unlikely" that TRIPS would require a different outcome.65 The United States claims that, in fact, however, the European Communities' argument in this proceeding ‑ that the United States must register and enforce trademarks that are confiscated and duly registered in the country of origin ‑ would compel a finding that the Czechoslovakian confiscating entity had an enforceable right to the Koh-I-Noor trademark outside of Czechoslovakia wherever it was registered by virtue of Article 6quinquies of the Paris Convention. This is a very different result from the original round of cases ‑ and one that would find the EC member States powerless to prevent the assertion of ownership by that confiscating entity. The United States claims that it would appear that many of the cases it discussed in its first submission concerning the principle of non-recognition of foreign confiscations, in addition to the Koh-I-Noor cases, would have come out differently if the European Communities' interpretation of the Paris Convention had been adopted and applied.
4.203.
The United States argues that the European Communities' assertion that the principle against the recognition of foreign confiscations is irrelevant to the present dispute is simply wrong.66 The United States submits that "[t]he principle of non-recognition exists because Members exercise their right to determine who is and who is not the owner of assets on their territory, including trademarks. This is a right that the European Communities asserts was taken away by TRIPS. That the principle of non-recognition of foreign confiscations exists alongside of TRIPS and the Paris Convention means that the European Communities' interpretation of TRIPS is incorrect. This principle is, therefore, of utmost relevance in this dispute."
4.204.
The United States submits that, contrary to the European Communities' statement which characterizes the United States as mixing up questions of ownership of trademarks in the United States and ownership of trademarks in Cuba, the United States position is clear: confiscating entities abroad may be able to assert ownership of assets in their own territory, but they cannot, by virtue of that confiscation, lay claim to assets in the United States.
4.205.
The United States submits that the European Communities' logic, by contrast, appears to be as follows: (1) Every State has the right to regulate the ownership of property in its own territory. (2) Therefore, Cuba had a right to confiscate assets, including registered trademarks, in Cuba. (3) The United States is not obligated to accept an attempt by Cuba to confiscate property in the United States, but (4) the United States is obligated to recognize the change of title of property in Cuba "and to draw certain consequences therefrom". These "consequences" apparently include an obligation to recognize the ownership of confiscating entities with respect to trademarks in the United States. The United States claims that something is wrong with the European Communities' analysis: their conclusion flatly contradicts their opening assumption. The United States does not dispute in this proceeding the right of countries to regulate the ownership of assets in their own territories, although in fact those rights are subject to limitations. The United States does dispute, however, that this results in the United States not being able to regulate the ownership of trademarks in its territory under TRIPS.
4.206.
The United States argues that the European Communities' sole claim in this dispute is that Section 211, on its face, violates the TRIPS Agreement – that is, that Section 211 requires that actions be taken that are inconsistent with the United States' TRIPS obligations. It does not allege, as it cannot, that Section 211 has caused any action to be taken that is inconsistent with TRIPS, and no such claims are within the Panel's terms of reference. The United States submits that, despite its claims that "the effects of Section 211 are likely to prejudice a great number of commercial relationships by EC enterprises not only with Cuban entities but other partners that fall within the scope of Section 211", the European Communities is unable to point to a single instance in which there has been any such prejudice, let alone whether any such prejudice would violate a TRIPS-protected right.
4.207.
In support of this claim, the United States argues that over two years after enactment, and despite the thousands of trademarks the European Communities claims are potentially in "jeopardy", the European Communities cannot point to a single action taken in violation of TRIPS under Section 211. The European Communities speculates that Section 211 might prejudice the "legitimate economic expectations of EC economic operators" but has not shown that it has or that it will. It appears to the United States that even the European Communities concedes that the United States would be entitled under TRIPS not to give effect to a confiscatory decree with respect to trademarks located in the United States. The United States assumes that even the European Communities would admit that EC economic operators purchasing purported rights from the confiscating entity in such US trademarks have no legitimate economic expectation with respect to those US trademarks, or at least no legitimate expectations under the TRIPS Agreement. Whether other such economic operators would come within the scope of Section 211 is an issue that would have to be decided upon by the courts based on the facts of the case.
4.208.
The United States further argues that the European Communities' concern with Section 211 is presumably not that it prevents the confiscating entity from asserting ownership in such a circumstance, which even the European Communities regards as legitimate, but that it supposedly goes far beyond such "legitimate" actions, into areas that the European Communities regards as illegitimate. The United States claims that this is where the European Communities' argument breaks down. Although the European Communities has speculated in a general way about how Section 211 might interfere with unspecified legitimate rights, it has not shown that Section 211 mandates that actions be taken that it considers contrary to TRIPS. This is the showing that the European Communities must make under the TRIPS Agreement to show that Section 211 is, on its face, inconsistent with TRIPS. The United States submits that the European Communities has failed to make any such showing.
4.209.
The United States recalls that the European Communities suggests, for instance, that Section 211 is objectionable because, unlike in the jurisprudence on the non-recognition principle, its scope extends "well beyond confiscated assets" and would apply to trademarks that are used in connection with a different class of products than those subject to the confiscation. The United States responds that, in fact, however, Section 211 is directed at trademarks "used in connection with" the confiscated assets. It is thus simply not possible to conclude from Section 211 that trademarks having no relation to the products subject to the confiscation would be within the scope of Section 211. It adds that trade names are associated with the business itself, and not with any class of products.
4.210.
The United States refers to the statement by the European Communities that Section 211 is objectionable because it is not aimed only at the same trademarks used in connection with confiscated assets, but also at trademarks "substantially similar" to the trademarks used in connection with confiscated assets. The United States responds that the point of trademark protection is to prevent consumer confusion as to the source of goods; a trademark that is "substantially similar" to another is as capable of creating confusion as a trademark that is "identical". For this reason one trademark can infringe another trademark if they are "substantially similar". It is in the context of trademark law that Section 211 focuses on identical or "substantially similar" trademarks. To speculate that a court or other decision-maker would use this provision to extend the scope of Section 211 to include completely separate and distinct trademarks from those used in connection with the confiscated assets is sheer fantasy.
4.211.
According to the United States, the European Communities is distinguishing "TRIPS-inconsistent" Section 211 from the "TRIPS-consistent" principle of non-recognition of foreign expropriations, on the grounds that the latter is a principle of "allocation" of ownership between two contending parties, whereas the former ‑ Section 211 ‑ simply blocks the ownership of confiscating entities, without allocating it to anyone else. However, any dispute that may arise under Section 211 will also likely involve two parties who claim ownership of the trademark and will also therefore appear to "allocate" ownership – just as in the jurisprudence. Further, however, TRIPS says nothing about "allocation" of ownership; it does not say that Members' rules of trademark ownership must allocate the ownership of all trademarks to one party or another. It is simply silent on the issue of ownership. A Member's law might state that ownership of a trademark must be "allocated" to someone; but nothing in TRIPS would require this. As to the relevance of "abandonment", this is a legal determination that depends on the facts and on the intentions of the owner. TRIPS does not require that Members have a policy of "abandonment" at all; therefore, the impact of "abandonment" on Section 211 decisions has no relevance to an analysis of Section 211's TRIPS-consistency.67 The United States argues further that the principle related to the extraterritorial application of foreign confiscatory decrees is articulated in the jurisprudence not as an "allocation" of rights to the original owner, but in terms of not recognizing the rights of the confiscating entities. The statements of principle expressed in the judicial decisions (e.g., foreign confiscations are "contrary to our public policy and shocking to our sense of justice and equity" and will not be given effect in the United States) do not reflect a mere neutral "allocation" of ownership rights.
4.212.
The United States notes that the European Communities claims that under Section 211 "the 'original owner' will under no circumstances become the owner of the trademark/trade/commercial names concerned […] Section 211(a)(2) and (b) will only grant the 'original owner' a negative right to prevent somebody else from enforcing certain rights." The United States argues that, assuming this distinction is relevant it is hard to see how Section 211 compels a US court not to find that the original owner is the owner of the trademark or trade name. Indeed, it would appear, to the contrary, that in any court proceeding under Section 211, a court will be called upon to determine who is and who is not the owner of the trademark or trade name, and that dispute may well involve the original owner and the confiscating entity. As to the observation that Section 211 "only" grants the original owner a negative right to prevent someone else from using the mark, the United States notes that this is precisely the right conferred on the owner of a registered trademark by Article 16.1 of TRIPS.
4.213.
The United States argues that Section 211 reflects the principle that US courts will not give effect to foreign confiscations with respect to assets in the United States, and will not recognize the ownership of confiscating entities in trademarks used in connection with assets they have confiscated (absent the permission of the original owners). Whether the court will recognize the ownership of one entity or another in a particular case will depend on the particular facts presented to it. All of the factual variations proposed by the Panel in its questions to the United States would raise different issues that would be taken into consideration by the court in determining the ownership of the trademark or trade name concerned. The United States does not believe that it is possible to credibly assert that, presented with a particular set of facts, a court or other decision-maker will believe itself compelled by Section 211 to make a particular decision that is contrary to TRIPS. Certainly, the European Communities has not presented any evidence that this is so.
4.214.
The United States submits that the European Communities has no basis to argue that the object of Section 211 is to "curtail the exercise of legally undisputed ownership rights held by Cuba or Cuban nationals in relation to assets situated in the US". According to the United States, the European Communities argues that ownership of the asset (i.e., the trademark or trade name) is assumed by US law, and that what Section 211 does is prevent the legitimate owner from enforcing his rights. The United States contends that, in light of the detailed description of US and European jurisprudence on the subject of recognition of foreign confiscations, it is incorrect that it is "legally undisputed" that confiscating entities have ownership rights in the United States with respect to trademarks used in connection with confiscated assets. It is precisely this ownership that is disputed under US law, both in the jurisprudence and in Section 211.
4.215.
According to the United States, Section 211 requires a decision-maker to consider, based on the particular facts at issue, numerous "ownership" issues. Among others, it appears that the decision-maker must determine that a business or assets existed and that it was owned by someone; that the business or asset was taken away from that owner without the payment of just and adequate compensation; that there were trademarks, trade names or commercial names used in connection with that business or assets (under US law, "use" in connection with a business or assets may create ownership rights in the trademark, trade name or commercial name); that there is an "original owner" of the trademark trade name or commercial name; that the trademark, trade name or commercial name disputed under Section 211 is identical to, or substantially similar to the trademark, trade name or commercial name used in connection with the confiscated assets (which addresses in part who the owner of that trademark, trade name or commercial name is); and whether the original owner of the trademark, trade name, or commercial name has consented to its registration and/or use by someone else.
4.216.
The United States submits that all of these questions raise "ownership" issues: they address the issue of who is, and who is not, the owner of the trademark, trade name or commercial name in the United States. Each of these questions must be resolved by the decision-maker on the basis of the particular facts before him or her, in order to decide whether Section 211 applies. If the answers to these questions establish that the confiscating entity is not the true owner of the trademark, trade name or commercial name (and does not have the consent of the original owner), then Section 211 directs the court not to "recognize, enforce or otherwise validate" any assertion of rights by that person. The outcome of the court's determination under Section 211 – that the assertion of rights by the confiscating entity not be recognized, enforced, or otherwise validated – cannot be read, as the European Communities apparently does, as a decision not to recognize, enforce or otherwise validate legitimate ownership rights. To the contrary, this outcome is the necessary result of the conclusion that the person asserting the rights has no such ownership rights.
4.217.
The United States submits that there is nothing in Section 211 that mandates any particular result that is contrary to TRIPS. Its application under any particular set of facts can vary and will depend on numerous decisions made by the decision-maker relating to who is the true owner of the trademark, trade name or commercial name at issue. Further, these decisions are subject to administrative and judicial review. Consequently, it cannot be said that Section 211 is contrary to any provision of TRIPS.
4.218.
The United States claims that the European Communities mischaracterizes Section 211 by suggesting that it targets trademarks and trade names that have nothing to do with the confiscated assets. In the view of the United States, this is apparently with a view to distancing the European Communities from the (well-founded) criticism that its position would create a requirement under TRIPS to recognize the effects of foreign confiscations. The European Communities' complaint appears to be that Section 211 targets trademarks that look like trademarks used in connection with confiscated assets, even though the trademarks might not have any legal or factual link to the confiscated assets or to trademarks associated with those assets. But the very fact that Section 211 is focusing on purported trademark rights asserted by entities that confiscated certain assets and the original owners of trademarks used in connection with those confiscated assets means that there is a link between the trademarks targeted by Section 211 and the confiscated assets.
4.219.
According to the United States, the European Communities makes several assertions on the scope of Section 211. First, the European Communities maintains that Section 211 requires no factual or legal link between the trademark for which enforcement is being sought and a trademark or trade name that existed in the United States at the time of confiscation. For the United States it is not clear why it matters from a TRIPS point of view whether a trademark existed in the United States at the time of the confiscation. Whether it did or did not exist at the time of the confiscation is irrelevant to whether the United States has the right to determine whether the confiscating entity owns or does not own the trademark. Further, however, Section 211 only refers to the "original owner" of the trademark used in connection with the confiscated asset. Section 211 does not specify the location of the "use", but use of a trademark ‑ even outside of the United States ‑ can give rise to ownership of that trademark in the United States under US law.68 Therefore, a court might or might not find that the original owner owned a trademark in the United States at the time of the confiscation, and the court might or might not find that this is relevant. It is simply unclear how a court would resolve this ownership issue. The United States notes that the one case which the European Communities has repeatedly brought up as an illustration of how Section 211 might work — Havana Club — involved a trademark that did exist in the United States at the time of the confiscation.
4.220.
According to the United States, the second assertion that the European Communities makes is that Section 211 targets trademarks that might cover products completely different from those subject to the confiscation. The United States submits that the European Communities does not say how this relates to any TRIPS obligation. The United States further responds that Section 211 requires that the trademark have been used in connection with the asset or business that was confiscated, and it focuses on protecting the interests of the "original owner" of the trademark used in connection with that asset or business. And, of course, trade names relate to the business itself, not to particular goods. The United States notes that, in the sole example that the European Communities cites ‑ Havana Club ‑ the US trademark at issue appears to have been used in connection with the exact product ‑ rum ‑ that was the subject of the confiscation.
4.221.
The United States continues that the third assertion made by the European Communities is that Section 211 may be applied to prevent the assertion of ownership by confiscating entities in cases where the original owner has legally abandoned the US trademark. The United States responds that again it is not clear what significance this assertion has in terms of consistency with TRIPS. TRIPS does not require an abandonment policy at all, so the fact that it might not be applicable in certain circumstances would not violate TRIPS. The United States notes that the European Communities cites once again the judicial decision in the Havana Club case, and submits that the court in that case declined to find that, simply because the original owner had ceased to use that trade name, the original owner had lost his right to prevent the use of his trade name by someone else. The court also noted, by way of explanation of its decision, that "[i]t is not likely that Congress wished to disadvantage a company that understandably ceased to use its trade name after the confiscation of its business". In other words, the court specifically recognized that, in the context of the forced confiscation of the Havana Club distillery, it may be appropriate to conclude that the original owners did not voluntarily cease use of the trade name with the intent not to resume use.
4.222.
According to the United States, the European Communities furthermore distinguishes Section 211 from the jurisprudence on non‑recognition of foreign confiscations on the grounds that Section 211 targets trademarks that have never been confiscated and that "have existed in the hands of owners unrelated to the expropriated Cuban business or have only been created in the United States after the Cuban revolution." The United States responds that this is not accurate. If the trademarks are in the hands of "owners" unrelated to the confiscated business, Section 211 would not apply, because Section 211 only deals with the trademark ownership of those who derive their ownership from the confiscated business. If the claimant has no relationship whatsoever to the confiscated business, it is hard to see how Section 211 could be applied to that claimant. Further, if the trademarks were only created after the Cuban revolution, a court could well find that there is no "original owner" of the trademark other than the confiscating entity itself, and, therefore, no room for the application of Section 211. The distinctions drawn by the European Communities are simply not there, and even if they were, they do not make out a case that Section 211 is inconsistent with TRIPS.
4.223.
The United States summarizes that the scope of Section 211 is not what the European Communities speculates. Further, even if the European Communities' description of the scope were accurate, the European Communities has failed to show that Section 211 is inconsistent with TRIPS.
4.224.
According to the United States, the European Communities also purports to describe the "operation" of Section 211. It engages in the same amount of speculation that it did in describing Section 211's scope, and fails completely either to show that Section 211 requires the actions that it claims are required, or to demonstrate that those actions, even if they were required, are inconsistent with the United States' TRIPS obligations.
4.225.
The United States submits that the European Communities first states that federally registered trademarks become "incontestable" after 5 years, and implies that the purpose and effect of Section 211 was to make Cubaexport's Havana Club "incontestable registration" contestable. The United States responds that this is incorrect. First of all, "incontestable" does not mean "unchallengeable": federal trademark registrations, no matter how old, are subject to challenge on bases that go to the ownership of the trademark. While emphasizing that the specific situation of "Havana Club" is not within the Panel's terms of reference, the United States notes that no one has made the statutory filing required for "incontestability", so "incontestability" is simply not an issue with respect to that trademark.
4.226.
According to the United States, the European Communities complains that Section 211 does not give any rights to the original owner of the confiscated business ‑ the European Communities appears even to allege that the original owner cannot be a party in an action in which Section 211 is involved ‑ but only curtails the rights of certain right-holders; the European Communities says this demonstrates the "punitive" nature of Section 211. The United States responds that this is an odd assertion, because there appears to be little question but that Section 211, where it applies, would give the original owner of a trademark used in connection with confiscated assets ‑ or his or her successor ‑ the right to exclude the confiscating entity or its successor from using the mark or from asserting ownership in the mark. This is a significant right for the original owner. It may be true that a third party who is sued for infringement by the confiscating entity in the United States might be able to defend himself by saying that the confiscating entity cannot assert rights in a trademark that he does not own. But this is not unusual, and this is not "punitive". The defendant in a trademark action can always defend himself by saying that the plaintiff does not own the trademark that is allegedly infringed. If the plaintiff does not own the trademark, he cannot maintain a suit for infringement, even against a third party. In the US view, Section 211 does not propose anything unusual in this respect.
4.227.
The United States submits that Section 211 does not mandate the kinds of decisions that the European Communities speculates might result from Section 211. According to the United States, the exact operation of Section 211 will depend on the facts before the decision‑maker, but the core issue to be addressed is the identity of the owner of the trademark at issue. Further, even if the European Communities' speculations were accurate, they do not amount to a violation of TRIPS.
4.228.
The United States concludes that it agrees with the European Communities that, if the principle of non‑recognition of foreign confiscations is represented by one circle, and TRIPS by another, these circles do not intersect. That is because the issue of whether a confiscating entity can claim ownership of trademarks in the United States is not addressed by TRIPS: the rules for determining the owner of a trademark are left to national legislation. In the view of the United States, the problem with the European Communities' position is that if TRIPS does require Members to recognize all registrants as owners, as the European Communities argues, then Members are powerless to deny ownership of trademarks in their territory to confiscating entities. The United States contends that this is tantamount to a requirement that Members give effect to foreign confiscations with respect to trademarks in their territory. It is not enough to say, as the European Communities has, that there is a principle of non‑recognition that relates to expropriations and is unaffected by TRIPS obligations. If Members are not compelled to give effect to foreign confiscations with respect to trademarks in their territory – and the European Communities agrees that Members are not – then the Panel must find that TRIPS itself does not compel Members to give such effect. The European Communities' interpretation of TRIPS does not permit such a finding. The correct interpretation of TRIPS requires it.

2. Ownership of trademarks

4.229.
In their submission, the parties presented arguments on the issue of the determination of the owner of a trademark. As these arguments relate to all specific inconsistencies with the TRIPS Agreement alleged by the European Communities, they are summarized below in a thematic manner.
4.230.
The European Communities argues that while it is true that WTO Members enjoy some leeway in relation to ownership, the TRIPS Agreement gives clear guidance for who has to be considered as the owner of an intellectual property right. The starting point is Article 1.3 of the TRIPS Agreement which refers to "[…] those natural and legal persons that would meet the criteria for eligibility for protection […]". This provision has to be read together with the relevant provisions on eligibility for protection in Part II of the Agreement for the intellectual property right concerned. For trademarks the relevant provision is Article 15 of the Agreement.
4.231.
The European Communities submits that, furthermore, in each Section of Part II of the TRIPS Agreement the characteristics of the right holders are described. For example, in the copyright Section of TRIPS it is the author of the work69 who is the owner of the rights granted in this Section and there does not exist ten thousand options of how to designate the author. An additional argument to support the view that TRIPS does define the owner of an intellectual property right can be drawn from Article 14bis(2) of the Berne Convention in which an exceptional grant of discretion is given to Members for the allocation of ownership to copyright in cinematographic works.
4.232.
In response to a question from the Panel on whether the TRIPS Agreement defines who is the owner of a trademark, the European Communities submits that while TRIPS or the Paris Convention do not expressly define the owner of a trademark, it would appear that direct or indirect references to ownership in TRIPS as well as the Paris Convention give guidance to Members in order to establish ownership. Article 15.1 of the TRIPS Agreement establishes a link between the trademark and goods or services emanating from an undertaking. This would suggest that only an undertaking can be the owner of a trademark to distinguish its goods or services. This would appear to be confirmed by Article 16.1 of the Agreement which equates the owner of the trademark with the undertaking whose goods or services are distinguished by the trademark. Also Article 19.1 of the Agreement seems to equate the owner of the trademark to the undertaking using the trademark for its goods or services. Therefore, it would appear that the principal assumption contained both in TRIPS and the Paris Convention is that the owner of the trademark is the undertaking which uses the trademark to distinguish its goods or services.70
4.233.
The European Communities further argues that WTO Members being completely free to allocate ownership of a trademark would lead to absurd results and would make Articles 16-21 of the TRIPS Agreement worthless.
4.234.
In response to a question from the Panel on whether there could be any situations where the holder of a trademark registration would not be the same as the owner of that trademark, the European Communities submits that there can only be one owner (leaving the issue of co-ownership aside) of a trademark for a given class of products or services in a given territory. The signs or combination of signs in relation to a class of products or services only become a trademark upon registration. Prior to registration there exists no trademark. Therefore, there can be no conflict between a registration owner and another owner of the same trademark. Trademark registrations can be attacked by third parties – for example on grounds of priority – typically within a given timeframe. Such an attack – if successful – will defeat the trademark, it will not create another trademark for anybody else. This can only be achieved by subsequent – successful ‑ registration. There exist situations where the trademark register (like for example a land register) is inaccurate and has to be rectified. In case the owner of a trademark dies or has transferred the trademark, the register has to be rectified and the heir or transferee be inscribed as owner.
4.235.
In response to another question, the European Communities submits that, in relation to patents, Article 27.1 of the TRIPS Agreement has some common features with Article 15.1 of the Agreement. Here as well an invention is in itself no property right. Only the patent which is registered on the basis of an invention, which meets the requirements set out in Article 27.1, constitutes the property right. All patent systems in the world (with the exception of one) operate on the basis of the so-called first-to-file system. This means that the first registrant meeting the requirements set out in Article 27.1 is the owner of the patent. Nobody else can be the owner of this patent. This argumentation also applies – mutatis mutandis – to Article 25 of the Agreement for industrial designs, which in many countries are protected as design patents.
4.236.
The United States submits that the Paris Convention, Article 1(1), established a "Union for the protection of industrial property". Article 1(2) states that "[t]he protection of industrial property has as its object", among other subjects, trademarks. Although the term "trademark" is not defined in the Paris Convention, one commentator on the Paris Convention noted in 1969 that "a trademark is usually defined as a sign serving to distinguish the goods of one enterprise from those of other enterprises. The proprietor of a trademark generally has the exclusive right to use the trademark, or variations of it, for the same or similar goods."71 Further, possibly because the principle was so universally understood as necessary to the functioning of an industrial property system as to go without saying, the Paris Convention nowhere defines or describes who is the proprietor, or owner, of the trademark.
4.237.
The United States elaborates that the decision on the identity of a trademark owner – who it is that may exclude others from using the mark – is, therefore, left to the domestic law of the Members of the Union. As one respected commentator has stated with respect to the Paris Convention, "[t]he question whether a person is the proprietor of the mark in a country of the Union will have to be decided according to the domestic legislation of that country".72 The way in which the ownership of a trademark is determined under the US law is described in paragraph 4,242 below. The United States notes that in other Members, domestic law provisions on ownership of trademarks are different. There is nothing in the Paris Convention that dictates the content of domestic law on the subject of ownership. Although the substantive rules on ownership are left to the domestic laws of the Members, a basic rule of the Convention under Article 2(1) is that, whatever the laws are, they must not grant fewer advantages to nationals of other Members than they grant a Member's own nationals.
4.238.
The United States further explains that the TRIPS Agreement elaborates on certain provisions of the Paris Convention with respect to trademarks by, for instance, defining eligible subject matter for trademarks (Article 15.1), specifying the minimum exclusive rights which must accrue to owners of registered trademarks (Article 16.1), and making certain enforcement procedures available to right holders (e.g., Article 42). In these ways, it goes beyond the Paris Convention framework. But, as in the case of the Paris Convention, the TRIPS Agreement does not contain any provision that specifies how trademark ownership is to be determined; it leaves that determination to the national law of each Member, subject to the requirements of national treatment (Article 3) and most-favoured-nation treatment (Article 4), among other TRIPS disciplines.
4.239.
In the US view, the Paris Convention and TRIPS rights with respect to trademarks accrue only to the owner of the intellectual property right, but the Paris Convention and the TRIPS Agreement do not provide substantive rules for determining who the owner of the trademark is.73 The United States emphasizes, in particular, that there is nothing in the TRIPS Agreement that takes away the sovereign right of a Member to decide that a person who traces his or her purported ownership of a trademark to a confiscation is not the owner of that trademark in the jurisdiction of that Member.
4.240.
As regards the determination of the ownership of a trademark under US law, the United States submits that, while "ownership" is generally established through use, there is a complex set of considerations that comes into play when decisions have to be made as to who owns a trademark, for instance, as between two users of the trademark, as between a distributor and a manufacturer, and as between related parties, each of whom claims ownership of the mark. Under US law, the owner of a mark is generally the party who controls the nature and quality of the goods sold or services rendered under the mark. Thus, the specific facts concerning the use of the mark are determinative of the issue of ownership in the United States.74 This is true regardless of who has registered the trademark: if the person registering a trademark in the United States is not the true owner of the trademark under US law, the registration may be cancelled.
4.241.
As regards the determination of "the original owner" referred to in Section 211, the United States submits that, in the context of a US court proceeding under Sections 211(a)(2) or (b), courts would use common law principles, based on the particular facts of the proceeding, to determine who the "original owner" is. Consistent with the principle of territoriality of trademarks, the "original owner" of the trademark, trade name, or commercial name would likely be determined under the law of the United States.75 This principle would not be applied differently in the case of well-known trademarks: the owner of the trademark would be determined under the laws of the United States. The issue of who is a "successor-in-interest" would be determined under the contract and corporation law applicable on the facts of each case. Such determination would normally involve application of the personal law applicable to the original owner and its successors, unless such laws were found to violate the public order of the forum, in which case they would not be applied.76
4.242.
In response to a question on the significance of a registration, the United States explains that, in the United States, registration is not conclusive of the ownership of a mark, and trademark rights acquired in the United States at common law exist independently of federal registration. Registration of a mark under the Trademark Act, 15 U.S.C. § 1051, et seq. confers prima facie presumptions of the registrant's ownership of the registered mark and of the registrant's exclusive right to use that mark in commerce. This is true in both administrative proceedings and in US courts. For instance, a registrant's claim to ownership of a mark can be defeated by a prior and continuous common-law usage of that mark or of a confusingly similar mark.
4.243.
The United States claims that the European Communities has failed to present any legal support for its conclusion that TRIPS dictates how the owner of a trademark, trade name or commercial name is determined, and that it prevents Members from making their own determinations as to ownership. It further claims that, in trying to support its case, moreover, the European Communities fails to reconcile its position with the accepted principle against the extraterritorial recognition of foreign confiscations, contradicts its own arguments and the practices of its member States, and offers contorted interpretations of the TRIPS Agreement that are incorrect.
4.244.
The United States argues that in neither its first submission nor its response to direct questions from the Panel has the European Communities been able to point to any provision of TRIPS that defines who is the owner of a trademark, or that prevents a Member from deciding that a confiscating entity is not entitled to own the trademarks used in connection with confiscated assets. The best the European Communities can offer is that "direct or indirect references to ownership in TRIPS as well as the Paris Convention give guidance to Members in order to establish ownership".77 The United States claims that the conclusions that the European Communities draws from this apparently vague "guidance" are wrong. But the question is not whether references to ownership in the TRIPS Agreement "give guidance". The question is whether the TRIPS Agreement prevents any Member from refusing to give effect to a foreign confiscatory decree by deciding that it will not recognize the ownership of confiscating entities or their successors in such trademarks in the United States. The answer to this is "no": TRIPS does not require the United States to recognize such ownership with respect to US trademarks.
4.245.
The United States submits that the European Communities' assertion that only an "undertaking" can be the owner of a trademark, because Article 15.1 establishes a link between the trademark and the goods or services emanating from an undertaking is untrue. An individual can own a trademark ‑ e.g., a celebrity can own the trademark to his name, an artist can own the trademark to work he has created (e.g., Superman, or Spiderman) ‑ and license the use of that trademark to a company that uses it in trade. This situation is specifically anticipated in Article 19.2.78
4.246.
The United States argues that the European Communities' conclusion that signs only become a trademark upon registration and that prior to registration there exists no trademark is, while critical to the European Communities' interpretation, wrong. The United States argues that it is critical to the European Communities' interpretation because it is on this basis that the European Communities asserts that the trademark registrant and the trademark owner are, by definition, the same entity under the TRIPS Agreement, and that, therefore, TRIPS addresses the rules of trademark ownership whenever it addresses registration, as in TRIPS Article 16.1 and 15.1 It is on this basis that the European Communities concludes, "[t]herefore there can be no conflict between a registration owner and another owner of the same trademark".
4.247.
The United States submits that this assertion is wrong because TRIPS was deliberately crafted to take into account both the civil law "registration" and the common-law "use" trademark systems. In the US common law system, trademarks are generally created by the use of the trademark in commerce to distinguish goods, not by the registration itself. Federal registration creates a presumption of trademark ownership, but that presumption is subject to challenge based on, among other things, who used the trademark first. TRIPS Article 16.1, which describes the rights conferred on the owner of a registered trademark, specifically states that these rights shall not "affect the possibility of Members making rights available on the basis of use". It is simply incorrect to assert, therefore, that under TRIPS, trademarks do not exist until they are registered. In the US system, they can and do exist, and they can and do have owners, without being registered. Nothing in TRIPS overturned this basic premise of US trademark law.
4.248.
The United States adds that if, as the European Communities asserts, there can be no conflict between a registrant of a mark and another entity who claims ownership of the mark (because, by definition, these have to be the same entity), it is not clear on what basis the European Communities can protect "well-known" marks, as required by the Paris Convention.
4.249.
Further, the United States claims that the European Communities' position seems internally inconsistent, because in response to a question from the Panel, the European Communities took the view that TRIPS does not address the relationship between principals and agents, and that this is a matter left for domestic rules.79 The United States argues that rules that determine who ‑ as between a principal and an agent ‑ can be the owner of a trademark, are one aspect of the trademark ownership rules left to national law. For the United States it is not clear on what basis the European Communities claims that this aspect of ownership is left to national law, whereas other aspects of ownership are not.
4.250.
The United States argues that the issue of trademark ownership, and whether TRIPS specifies the identity of the owner, is obviously important. It is because TRIPS does not specify the identity of the trademark owner that Members retain the right to adopt and enforce national rules of trademark ownership. This includes the right not to recognize the ownership of confiscating entities in trademarks used in connection with confiscated assets. From the US perspective, the EC view to the contrary appears to be based principally on an assumption that all signatories to the TRIPS Agreement have a trademark system in which registration itself creates both trademark rights and ownership rights, and that, in fact, TRIPS requires such a system. The United States submits that it does not have such a system, and that TRIPS does not require such a system.80 TRIPS leaves decisions of ownership to the Members, and, consistent with this freedom, the United States has many rules pertaining to who can be a trademark owner (including with respect to related parties and agents). TRIPS certainly permits other Members, including EC member States, to choose to equate registration with ownership,81 but it in no way requires it.
4.251.
The United States recalls in this context that EC member States such as Denmark and the United Kingdom have apparently considered it their right under the Paris Convention to transfer ownership of a trademark registration from a confiscating entity to the prior owners.82 It claims, consequently, that whether registration is completely determinative of trademark ownership, even in the European Communities, appears questionable.
4.252.
The United States asserts that, in sum, the European Communities' position that TRIPS does in fact determine who the owner of a trademark is, and that it prevents Members from determining ownership with respect to confiscated trademarks, has no support in the TRIPS Agreement and is inconsistent with both the European Communities' own arguments and the practices of its member States.
4.253.
The United States argues that although TRIPS does not itself dictate who is an owner of a trademark under national law ‑ leaving that issue instead to national rules ‑ it does contain numerous disciplines and safeguards that prevent Members from abusing this freedom to benefit their own nationals or to unfairly curtail the trademark rights of others. The role of protections offered by the national treatment and most-favoured-nation provisions, among others, are significant. Given the broad variety of national rules among Members concerning the conditions for filing trademark registrations and rules of trademark ownership, a key safeguard against abuse — created by both TRIPS and the Paris Convention - is that whatever rules are in place, they cannot treat non-nationals worse than nationals, and they cannot treat the nationals of some nations worse than the nationals of others. These principles act as a powerful discipline on Members, in those areas, such as trademark ownership, that are left to national laws. Generally speaking, therefore, if those laws or rules are acceptable as imposed on the nationals of the Member, they may be imposed on the nationals of other Members. In the absence of specific rules defining who the trademark owner is, the national treatment and most-favoured-nation provisions, among other provisions, guard against abuse.83
4.254.
The United States argues that it is not unusual that TRIPS would leave such a matter as trademark ownership to national legislation. Another obvious example under TRIPS and the Paris Convention relates to patents. Although TRIPS Article 27 describes patentable subject matter, it does not mandate whether the owner of a patent is the person who first made the invention, or the person who first filed a patent application claiming the invention. Under US law, when two people claim the same invention, the person who can prove that he or she made the invention first will be awarded ownership of the patent, assuming that the invention is patentable. By contrast, in most other WTO Members, ownership of a patent belongs to the first person to file a successful patent application. This key difference in determining the ownership of patent rights as between competing claimants is not resolved by the TRIPS Agreement or the Paris Convention; both are silent. The United States gives another example from the area of copyright.84
4.255.
According to the United States, it is curious that the European Communities uses this difference to suggest that the patent provisions of TRIPS on protectable subject matter do dictate this aspect of patent ownership. After noting that one country (i.e., the United States) has a "first to invent system", the European Communities notes that other countries have a "first to file" system, and that "this means that the first registrant meeting the requirements set out in Article 27.1 TRIPS is the owner of the patent. Nobody else can be the owner of this patent." While this may be true of "first to file" systems, it is not true of "first to invent" systems, and nothing in Article 27.1 requires that a Member's laws incorporate a "first to file" system. The European Communities seems to believe that the TRIPS Agreement, which was specifically negotiated to accommodate both the US and the EC systems, in fact mandates the EC approach.
4.256.
The United States claims that the fact that these differences among Members exist with respect to patents and copyrights has not detracted from the disciplines of the TRIPS Agreement with respect to these intellectual property rights. Similarly, in the trademark area, the lack of TRIPS rules concerning whether confiscating entities must be recognized as owners of trademarks in a Member's territory does not take away from the other TRIPS disciplines.
4.257.
The United States reiterates that in its view the European Communities is seeking to re-interpret TRIPS and the Paris Convention so that these agreements accommodate only the civil law system of trademark law, and prohibit the US common law system. This is at the bottom of the European Communities' argument that, under TRIPS, trademarks only come into existence when they are registered, and that whoever registers the trademark "owns" the trademark. The United States contends that these assertions are not consistent with text of the TRIPS Agreement, and are entirely contrary to the US trademark system, in which trademarks are generally created by use and in which registration is not conclusive of ownership. TRIPS and the Paris Convention were specifically drafted to take into account both the civil law and the common law trademark systems, and cannot now be read to mandate the civil law system.

3. Burden of proof

4.258.
The European Communities argues that in line with established rules on the issue of burden of proof, as expressed by the Appellate Body in India – Patent Protection, the burden to prove that Section 211 may mean something else than its plain text is on the United States.
4.259.
Before responding to the specific claims made by the European Communities in its first written submission, the United States, in its first written submission, questions whether the European Communities as the complaining party has submitted arguments and evidence sufficient to raise a presumption that the US measures are inconsistent with its obligations under TRIPS Agreement. The United States recalls that the Appellate Body stated in United States—Measures Affecting Imports of Woven Wool Shirts and Blouses from India that the burden of proof rests upon the party, whether complaining or defending, who asserts the affirmative of a particular claim or defence. If that party adduces evidence sufficient to raise a presumption that what is claimed is true, the burden then shifts to the other party, who will fail unless it adduces sufficient evidence to rebut the presumption.85 Under this rule, as recently applied to the TRIPS Agreement in Canada – Patent Term,86 the European Communities has the initial burden of establishing a prima facie case of inconsistency with a particular provision of the TRIPS Agreement by adducing sufficient evidence to raise a presumption that its claims are true. Only upon establishing a prima facie case of inconsistency would any burden shift to the United States to refute the claim of inconsistency.
4.260.
The United States argues that, in this dispute, the European Communities has not sustained its burden of establishing a prima facie case that Section 211 is inconsistent with any provision of the TRIPS Agreement. It has not presented sufficient evidence of any inconsistency to create a presumption that its claims are true. There is little specificity or substance to the European Communities' argument and what little there is – while insufficient to create a presumption of inconsistency – is easily refuted.
4.261.
The United States further argues that the European Communities' claims with respect to Sections 211(a)(1) and (b) completely ignore well-established doctrines with respect to the ownership of trademarks and well-established policies against extraterritorial recognition of foreign confiscations. In addition, in maintaining that Section 211(b) is inconsistent with a number of TRIPS Articles, the European Communities states that "the precise scope" of Section 211(b) is "largely obscure". It then offers an interpretation "[b]y way of speculation" and some dictum from a court case. Since it is the European Communities' burden to demonstrate that Section 211(b) is inconsistent with TRIPS, the European Communities' admission that it does not know exactly what Section 211(b) covers is evidence that the European Communities has not sustained its burden in this dispute.
4.262.
Referring to the first written submission by the European Communities, the United States claims that the European Communities has done little more than quote or restate various provisions of US law, quote or restate various TRIPS provisions, and ask the United States to prove that Section 211 is consistent with TRIPS. This reverses the proper allocation of burdens.

V. ARGUMENTS OF THE THIRD PARTIES

Nicaragua87
5.1.
Concerning the right of private ownership, Nicaragua states that the right to ownership is the most complete right that a person may have over property. It is the real right par excellence; it is absolute, in that its holders are fully entitled to enjoy and dispose of what belongs to them with no limitations other than those accepted by them or imposed by the law in the public interest or in defence of another person's rights. Ownership, while comprising an element of appropriation and personal use, also comprises a social element in that it contributes to ensuring the life and welfare of the community.
5.2.
Article 44 of the Constitution of Nicaragua stipulates as follows: "The right of private ownership of movable and immovable property and of the instruments and means of production is guaranteed. By virtue of the social function of property, for reasons of public utility or social interest, the right is subject to the limits and obligations imposed by the law. Immovable property (…) may be the subject of expropriation in accordance with the law following the cash payment of fair compensation (…). The confiscation of property is prohibited (…)."
5.3.
Nicaragua argues that within the territory of a State, the exercise of territorial powers by another State is prohibited except with the consent of the former, i.e., unless there is an international agreement or convention regulating the exercise of such powers. On the basis of this principle and of the above-cited constitutional article, the Government of Nicaragua does not recognize rights based on acts of confiscation ordered by other States. Indeed such acts are inconsistent with its basic constitutional principles governing the right of private ownership.
5.4.
Intellectual property constitutes a special case, and is therefore regulated individually on the grounds that it involves a right by which property is submitted to the absolute and exclusive will and action of the holder.
5.5.
Thus, intellectual property rights are protected by the provisions of international agreements such as the Paris Convention (1967), the Berne Convention (1971), the Rome Convention (1961), the Washington Treaty, and the TRIPS Agreement. But in addition to being protected under those agreements, they have been recognized in the principal declarations on human rights:

(a) Through the recognition of the right of ownership in general; and

(b) implicitly, through the recognition of the right to participate in the cultural life of a country.

5.6.
According to Article 17 of the Universal Declaration of Human Rights, "Everyone has the right to own property alone as well as in association with others. No one shall be arbitrarily deprived of his property". A similar provision appears, inter alia, in the American Declaration of the Rights and Duties of Man and the International Covenant on Economic, Social and Cultural Rights of the United Nations.
5.7.
According to Article 14 of the Convention Relating to the Status of Refugees, in respect of the protection of industrial property, such as inventions, designs or models, trademarks, trade names, and of rights in literary, artistic and scientific works, a refugee shall be accorded in the country in which he has his habitual residence the same protection as is accorded to nationals of that country. In the territory of any other Contracting States, he shall be accorded the same protection as is accorded in that territory to nationals of the country in which he has his habitual residence." This reaffirms the obligation of every State to afford protection to the legitimate holder of intellectual property rights, even when such rights have been damaged through actions in time of war.
5.8.
Concerning the TRIPS Agreement and the Paris Convention (1967), Nicaragua states that in the international society of today, States are the subject of international law par excellence. States are legal persons acting through their executive, legislative or judicial bodies, which, in their turn, are subject to the domestic laws of the State. In this sense, domestic law facilitates compliance with international law, which is not only applicable externally, i.e., at the level of inter-State relations, but must also be observed within the State, i.e., in relations between the State and individuals under its jurisdiction.
5.9.
Both the TRIPS Agreement and the Paris Convention are agreements which establish minimum standards for the protection of intellectual property rights, and the members of those Agreements are free to grant more extensive protection to intellectual property through their domestic laws.
5.10.
Nicaragua considers that neither the TRIPS Agreement nor the Paris Convention stipulates the way in which Members of the WTO or of the Union, under the Paris Convention, must determine the criteria to be observed with respect to the acquisition of intellectual property rights.
5.11.
In this respect, Article 1.1 of the TRIPS Agreement states that Members may, but shall not be obliged to, implement in their law more extensive protection than is required by the TRIPS Agreement, provided that such protection does not contravene the provisions of the Agreement. Similarly, the Agreement excludes from its scope the notions of creation, exhaustion or amendment of intellectual property rights.
5.12.
Article 2 of the Paris Convention (1967) clearly lays down the principle of compliance with domestic legislation and territoriality of industrial property. Nicaragua considers that every State has the sovereign right to determine how intellectual property rights are acquired under its domestic law.